Is this medicaid fraud?

I am all for people receiving government aid who truly need it, but I get a little ticked off when someone takes it who has other options. My sister just had a baby with her (loser) boyfriend. He signed himself up for health insurance at her urging, but decided not to put the baby on it. Instead, they are using medicaid for the baby. I understand my sister being on medicaid because, since she is not married to the guy, she can't get on his insurance. But it makes me very angry that they chose to put the baby on medicaid when they could have gotten him private insurance. I know private insurance in more widely accepted and it's easier to get quick appointments, so why would you put your baby on medicaid if you had other options? She said it would have upped his premiums by about $110 a month, but he had no problem buying her expensive diamond earrings for Christmas. Her boyfriend brings home about $4000 a month, pays little rent, and drives an expensive car. My sister does not work and depends mostly on my mom financially. My sister is 34. When we had my son, my now husband and I were not married. I was on medicaid, but my husband insisted he put the baby on his insurance. He felt it was the right thing to do, and he brings home about $1800 a month. I told my sister this, and she could not understand why on earth we would choose to put our son on his father's insurance when we easily could have gotten him medicaid for free. This makes me so angry. I guess some people have very little ethics. I might also add that this baby was totally planned. Why would you plan on having a child when you aren't even willing to pay for their health insurance? Makes me sick!