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One of the largest entitlement programs in the country is incentivizing prescription drug trafficking and exacerbating the national opioid epidemic, according to a new Senate report published last week.

The Senate Committee on Homeland Security and Governmental Affairs released a Major Staff report, which details how Medicaid policies governing prescription drug prices, expanded at the state level through the Affordable Care Act (ACA) in 2014, “perversely” incentivize opioid abuse and illicit sales, as well as larger scale trafficking operations involving both criminal drug lords and respected doctors.

The Majority Staff Report presents evidence that financial incentives provided through Medicaid are negatively contributing to the ongoing addiction crisis, contradicting the common media narrative that Medicaid expansion under the ACA is essential to combating the epidemic because of its funding for addiction treatment programs.

It offers Clay County, Kentucky, as an example, where the number of residents on Medicaid rose from 35 percent to 60 percent in the three years following Medicaid expansion under the ACA. Over that same time period, opioid abuse increased, as did wait lists for inpatient drug treatment centers.

The report notes that roughly 70 million people are covered under Medicaid, “more than one fifth of the U.S. population,” which has created, “a series of incentives for potential abuse of opioids, which are rooted in federal law itself.” It points out Medicaid patients usually do not not pay for “covered medical expenses,” and that federal law mandates additional costs such as co-payments be kept small for lower income groups.

The incentives were made worse, according to the report, through an Obama administration rule mandating that states could charge no more than $4 to Medicaid patients for certain groups of prescription drugs, including opioid painkillers. In some states patients on Medicaid pay as little as a $1 co-payment for up to 240 prescription pills that carry a street value of roughly $4,000.

While evidence of fraud concerning opioids exists in many other federal programs, the authors of the Majority Staff Report argue, that Medicaid is the federal program most prone to abuse, and the primary government funding source for the epidemic.- More than 80 percent of the cases presented in the report are from states participating in ACA Medicaid expansion.