In The Press: How to Win the War on Fraud, Medicaid Loopholes, Trump’s $1,000 Retirement Match, and Shutdown-Proof ICE

Trump’s $1,000 Retirement Match: No Fiscal Authority, No Good Reason

Jessica Hall reports on President Trump’s plan “to create retirement-savings plans for workers who don’t have access to one through their employer, offering up to $1,000 a year in matching funds” for MarketWatch. Romina Boccia explains why the plan would require congressional authorization — and why lawmakers should think twice before approving it:

“Americans are still waiting on their tariff rebate checks and DOGE dividend checks. Not only does the administration lack the fiscal authority to seed 401(k)s with a $1,000 taxpayer match, nor is this a good idea,” Romina Boccia, director of budget and entitlement policy at the Cato Institute, said in an emailed statement after Trump’s comments. “Americans need a simpler system of tax-advantaged savings via universal savings accounts, not more tax-advantaged accounts (i.e. Trump accounts) or related handouts.”

Allie Kelly and Noah Sheidlower write for Business Insider on how these plans might work and quote Boccia on why locking up low-income workers’ savings in retirement accounts could backfire.

The Trump administration did not fully address how the $1,000 match would be funded. Romina Boccia, director of budget and entitlement policy at the Cato Institute, said that the administration lacks the fiscal authority to carry this out.

Boccia added that “the real problem isn’t a shortage of government-sponsored savings vehicles.”

“Many low-income and younger earners don’t participate in 401(k)s because it often doesn’t make economic sense for them,” Boccia told Business Insider. “They face pressing short-term needs — housing, emergencies, education, starting a family — and locking up savings until age 59½ with penalties for early access can leave them worse off.”

Medicaid’s $200 Billion-Dollar Loophole

Jack Nicastro writes for Reason about the Trump administration withholding $259.5 million in Medicaid funds from Minnesota over fraud allegations. Meanwhile, the far larger structural problem of Medicaid’s federal matching system legally enables states to shift billions in costs to federal taxpayers each year.

The Cato Institute's Romina Boccia and Tyler Turman describe how states have long exploited legal gimmicks to shift 70 percent of Medicaid costs from the state to the federal level. Instead of actually spending money on health care, states effectively tax health care providers, "use [this] revenue to claim federal matching funds, and rebate the tax money back to providers through Medicaid payments before pocketing the rest," they explain. Similarly, states borrow money from their city and county governments to increase federal Medicaid funding and then return a portion of these federal dollars to local governments.

These schemes, which Michael Cannon, the Cato Institute's director of health policy studies, refers to as "perfectly legal" fraud, were responsible for over $173 billion (20 percent) of the $866 billion the federal government and states spent on Medicaid in 2022. By contrast, the Department of Health and Human Services (HHS) recovered only $416 million from criminal fraud in 2022. In 2025, the HHS Office of Inspector General charged 324 defendants with $14.6 billion in health care fraud, which is still much lower than the federal dollars lost to provider tax abuse and intergovernmental transfers.

The Debt Dispatch previously reported that the Centers for Medicare and Medicaid Services finalized a rule to end states’ ability to exploit one of these loopholes, saving federal taxpayers $78 billion over the next 10 years. Cato’s Marc Joffe and Krit Chanwong first exposed how provider taxes created the Medicaid funding loophole “under which the state levies a tax on healthcare providers and uses the tax revenue to pay for Medicaid.”

How to Win the War on Fraud

President Trump appointed Vice President JD Vance to lead the ongoing federal “war on fraud,” during this year’s State of the Union address. Cory Smith reports for The National News Desk:

Romina Boccia, the director of budget and entitlement policy at the Cato Institute, a libertarian-leaning think tank, said the Trump administration is right to focus its energies on fighting fraud. And she said support from the states will be critical to the fight’s success.

A lack of oversight contributed to much of the “fraud crisis” we see today, Boccia said.

State administrators are closer to these problems than the federal government and are therefore more apt to catch financial mismanagement.

“However, the best solution is to give states more financial skin in the game,” Boccia said via email. “So long as states have the option to spend money that isn’t theirs, the perverse incentives that come with it will continue to be present.”

Enforcement alone won’t fix the problem, Boccia said. She called for program reforms.

Welfare fraud persists largely because states run programs fueled by federal dollars, Boccia said. When states are spending Washington’s money, they have weaker incentives to prevent waste and abuse, she said.

Government programs with open-ended entitlement structures allow states to “game the system” so they can draw more federal dollars and expand benefits, Boccia said. She mentioned “legal gimmicks,” like provider taxes in Medicaid, or broad-based categorical eligibility for food stamps.

She said converting Medicare to a cash-transfer program similar to Social Security would be the best way to curb waste, fraud and abuse in that program. That’s because seniors receiving Medicare subsidies as direct payments would have stronger incentives to avoid scams and wasteful expenditures than federal middlemen.

She also advocated for block-granting programs like the Supplemental Nutrition Assistance Program (SNAP) and Medicaid. Under a block grant, the federal government would give states a fixed amount of money. That would cap the federal government’s financial liability and give states more flexibility in how the money is used. But it could also result in benefit cuts if states can’t or are unwilling to cover rising costs or needs.

Boccia said the block grant approach would give states a stronger incentive to combat fraud within the programs.

“But the ideal solution is to eliminate federal funding for these programs such that states that choose to provide food or healthcare assistance fund state aid with state taxpayer dollars,” Boccia said. “True accountability in America’s welfare programs begins with states answering directly to their constituents by paying the full financial consequences of running them poorly.”

How ICE Became Shutdown-Proof

Ignacio Calderon and Lauren Villagran report for USA Today that despite the partial government shutdown over DHS funding, ICE has nearly $75 billion in reconciliation money to operate through 2029 — roughly six times its annual budget. Dominik Lett explains why that's a problem for fiscal accountability:

But “reconciliation” is a funding mechanism outside the budget process. Cato Institute policy analyst Dominik Lett argues that reconciliation made ICE shutdown-proof.

“By shifting immigration enforcement and defense spending outside the normal appropriations process, Republicans have short-circuited the system of checks and balances that restrain the growth and abuse of government power,” he said in a Feb. 10 analysis.