Op-Ed in The Wall Street Journal by Brian Blase |
The left’s new priority is to convince Congress to send hundreds of billions of additional dollars to states to help them weather the coronavirus storm. A leading Democratic proposal would funnel the money through Medicaid, with a built-in incentive for states to keep their economies closed and unemployment rates high.
The bill, introduced by senior House Democrats, would increase the federal reimbursement of state Medicaid spending by 4.8 percentage points for each point by which the state’s unemployment rate exceeds a threshold, likely around 5%. The higher its unemployment rate, the less each state would have to pay for its share of Medicaid.
The new formula, proposed as a permanent change, would result in the federal government covering almost all Medicaid costs for the states this year.
With surging unemployment, under this proposal every dollar a state spends on Medicaid for the rest of 2020 would likely bring in $19 in federal funds. This invites enormous and wasteful spending; expect the greatest benefit to go to the wealthiest states.
If it must incur additional debt to help states, Congress should abide by four principles. First, the aid should be capped and temporary. Second, it shouldn’t run through Medicaid. Third, it should encourage economic reopening and not be biased toward continuing shutdowns. Fourth, aid should be conditioned on structural reforms that help right the federal-state fiscal relationship.
Read the full article.