Just Say No to the Medicaid Bailout

Dennis Smith / November 18, 2008

Senate leaders are preparing yet another big bailout package, this time for states in the form of increased federal matching rate for the $350 billion Medicaid program. If enacted, this would be the second time in less than ten years that Congress provided a “temporary” increase in the federal Medicaid match. Rather than increasing the federal match rate for Medicaid, true reform is needed.

Reform should begin with the recognition that the existing matching requirement of Medicaid has proved to be too erratic and unstable for both the federal government and the states. In a November 16 Washington Post article, “Facing Shortfalls, States Seek Emergency Aid From Washington,” California Governor Arnold Schwarzenegger nailed it when he said, “Government is really at fault, and this is why government has to get us out of this mess …”. While he was referring to the subprime mortgage meltdown, he could have also been referring to the crisis states are facing in Medicaid. But when it comes to Medicaid, states must accept a fair share of the blame for the “mess.”

Much like the private sector, state officials got themselves into “this financial mess” through the lure of easy money. (more…)