Some ideas are better on paper than in reality. That’s the case with state-subsidized home health care performed by relatives.

In principle, it saves money to pay relatives for providing basic care that would be more expensive for the government in a hospital or nursing home. In practice, the policy has become riddled with fraud, almost everywhere it has been tried. The only solution may be to end it.

Ever since the pandemic, when California suffered upward of $30 billion of fraud in the unemployment benefits program, it was obvious the real story of fraud in the state was much bigger.

(California borrowed that money from the feds, and is the only state that hasn’t paid back the borrowed funds. On top of that, Gov. Gavin Newsom stuck California employers with the long-term bill.)

When it comes to Medicaid, which is a federally-subsidized program providing health care to low-income families, states typically pay only 31% to 35% of the costs, with the feds picking up the rest of the tab. 

Obamacare requires states to revalidate all of their Medicaid providers at least once every five years. This is a ridiculously long period, and should be decreased to every two years, with a thorough review. 

States are required to check their providers against a federal blacklist of providers that have committed crimes, gross negligence, fraud, or patient abuse.

States also have to inspect providers deemed a high fraud risk.

Any state that does not show it is in full compliance, and fails to provide information to the national database, should be suspended from receiving any benefits until it is in full compliance.

California knew that it had a problem.  A 2022 California state audit found that more than 150 hospice and home health agencies were licensed at a single building in Los Angeles. 

But the dubious practices continued, with few consequences, until recently.

Into this mess came a policy, in many states, of having relatives care for their family members in a home setting instead of moving them to nursing care. Once instituted, the program spread like wildfire, due to the fact that people found they could get paid for sitting at home with grandma. 

The levels of controls on this program have been seemingly nonexistent.  

In California, the program is called In-Home Supportive Services (IHSS). There are currently about 500,000 enrolled caregivers, with about 370,000 of those being family members. 

It has been noted that California has some of the most lenient requirements in the nation.  Almost any member of a family — including a niece, nephew, or cousin — can qualify. 

The state restricts payments to 283 hours per month. The national average is 125 hours. 

Compare that to a full-time public sector job that is typically about 172 hours per month. 

IHSS wages are a minimum of $16 per hour, with some counties — like Los Angeles — paying up to $21 per hour. 

And here is an amazing aspect of the program: The payments are totally tax-free for federal and state income taxes, if you live in the same home as the patient.

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The counties do an initial check on the provider and the recipient of the care, but there appears to be little review of the process once established. 

Outside providers must check in and out electronically each day, but no one appears to be monitoring that. 

Family members just have to submit weekly time sheets.  And once they show they supposedly live with the patient, who checks again to make sure?  

The expenditure for the program is rising significantly, with the amount during 2025-26 being $29.9 billion, an 11.5% increase from the prior year. 

And why would people not participate in this program?  They can stay home and collect tax-free money for supposedly taking care of a relative, with little or no supervision. 

In fact, social media is riddled with pitches like “How to get paid for staying home,” or “Did you know California will pay you $20+ an hour just to look after mom?”   

The federal government recently announced the suspension of $1.3 billion in Medicaid payments to California.

They should stay suspended until the programs are revamped with actual rigorous controls.

When the state is only picking up 30% of the payments, its motivation to control growth of the program will remain extremely low. If California suddenly has to pay the full tab, that may move the state toward actual fraud enforcement. 

Home heath care by relatives was a novel idea that has been terribly executed, and should be either totally revamped or put out of its misery.  

Bruce Bialosky, a former presidential appointee, is a certified public accountant specializing in taxes.