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Betsy McCaughey
Liberty Belle
10 Feb 2016
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27 Jan 2016
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Medicaid Is a Verb: Milking the Taxpayer


Last week, the House of Representatives Committee on Oversight and Government Reform disclosed how state officials in New York scammed federal taxpayers out of billions of dollar by exploiting the Medicaid system.

The federal government matches dollar for dollar what a state spends on Medicaid. New York politicians have turned Medicaid into a verb: it means to spend profligately, label it Medicaid and bilk federal taxpayers for the match.

Amazingly, New York spends $5,118 per day per patient in state facilities for the mentally disabled, equivalent to $1.9 million a year per patient. "Personal care" for the homebound is a New York Medicaid benefit that includes grocery shopping and housekeeping, and it costs as much as $150,000 a year per recipient. Overall, New York spends more on Medicaid than the two most populous states in the U. S. — California and Texas — combined and hauls in more matching federal funds.

The congressional committee is calling for a federal investigation of New York's Medicaid spending, citing Governor Andrew Cuomo's unwillingness to answer the committee's inquiries, as well as the "politicized, dysfunctional and complacent" performance of the state's Medicaid Inspector General, James Cox, a Cuomo appointee. An investigation might chase these foxes out of New York's hen house. But this isn't just a New York problem.

The bigger culprit is the Medicaid matching rule, which invites abuse. It lays out a red carpet even for politicians who are otherwise inclined to be honest stewards of taxpayers' money. And the problem is about to get much worse because the Obama health law lures states to loosen their Medicaid eligibility rules and expand enrollment by promising the federal government will pay 100 percent of the cost of the expansion until 2018, and then 90 percent of the cost thereafter. That's a 9 to 1 match.

The red carpet invitation has enticed even conservative governors John Kasich of Ohio and Jan Brewer of Arizona, an outspoken critic of President Obama and his health plan.

Last week, both governors stunned the nation by announcing that they will participate in Obamacare's Medicaid expansion. Brewer said it would "inject $2 billion" into the state's economy.

Not all governors are hurrying to the party. Wisely, 10 have refused and another 20 are reserving decision. They know that the federal government can break its promise, leaving the state stuck with vastly expanded Medicaid rolls and no way to pay for them.

States that accede to the Obamacare offer will no longer set eligibility rules based on what state budgets can handle. The federal government will call the shots. Packing the Medicaid rolls is the new health law's primary way of dealing with the uninsured, and it would expand Medicaid by an astounding 42 percent in Florida if Governor Rick Scott, (still undecided) goes along.

Last summer, a bipartisan State Budget Crisis Task Force, chaired by former Lt. Governor of New York Richard Ravitch and former Federal Reserve Chairman Paul Volcker, warned states not to go along with Obamacare's Medicaid expansion. Every deficit reduction plan being discussed in Washington DC includes abandoning that 9 to 1 match soon, the Task Force warned. States that expanded Medicaid to comply with the Obama health law would be plunged into fiscal disaster. Medicaid is already consuming a third or more of many state budgets. States would literally have to stop funding roads, public schools and other essential services to pay for Medicaid.

Counting on venality to triumph over wisdom, President Obama is assuming most governors — Republicans as well as Democrats — will ignore this danger and opt for the Medicaid expansion. If the governors capitulate, another health program will fall entirely under federal control, state politicians will be tethered to the president and his minions in the Medicaid bureaucracy, and taxpayers' dollars will be lavished on anything politicians can Medicaid. That's a verb, you know.

The remedy is to abandon the concept that federal Medicaid payments increase when states spend more. Federal contributions to Medicaid should be fixed amounts, what some politicians call block grants. It's common sense — a rarity in Washington D.C.

Betsy McCaughey is a former lieutenant governor of New York State and author of "Beating Obamacare," available at


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