Lawmakers in New York, California, and Illinois have been contending with budget deficits this year, but that’s not the case in most states. Yet, even in states with budget surpluses, governors and legislators are worried about rising costs, particularly for Medicaid.
Such concerns are warranted, considering how Medicaid – the taxpayer-funded health insurance program for low-income people jointly run by the federal and state government – is the largest spending category in most state budgets. Furthermore, Medicaid is also the fastest growing spending item for most states, even those where budgets are currently in the black.
The schemes and practices that state officials have used to draw down more federal money through the Medicaid system are getting more attention in Washington. Some are well known, such as the use of hospital provider tax hikes as a way to trigger greater federal Medicaid matching funds in order to facilitate higher levels of overall spending. The One Big Beautiful Bill Act (OBBBA) that President Donald Trump signed on July 4 includes a provision that cracks down on that practice as a cost-saving mechanism.
Other Medicaid cost-increasing practices are more obscure, such as local officials’ use of public ambulance agencies to drain more taxpayer dollars from federal coffers through EMS reimbursement rates up to five times higher than what private providers get, with the difference facilitating an expansion of local government spending. Whereas hospital bed tax hikes have been used to increase the amount of federal dollars that states can access to subsidize overall state spending, local government-run ambulance agencies have been using inflated EMS reimbursement rates as a way for local governments to backfill deficits and subsidize increased local spending with federal tax dollars.
To continue reading about this matter and many want Congress to prevent states and localities from using inflated Medicaid EMS reimbursements as a way to subsidize growing local budgets, click here.
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Author: Patrick Gleason
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