Stimulus-Enhanced Medicaid Funds Are a Trap for Non-Expansion States

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Rahm Emanuel, Obama White House chief of staff, once warned, “never let a crisis go to waste.” In the aftermath of the pandemic—and the economic damage that followed—Democrats are taking Rahm’s advice to heart and using “relief” funds to push through a wish list of policies that disincentivize work, encourage dependency, and threaten to explode state budgets. 

Using Medicaid as a back door for universal health care coverage is at the top of their list. Buried within President Biden’s latest $1.9 trillion stimulus is an attempt to persuade states to expand their Medicaid programs to cover a new class of able-bodied adults—who do not currently qualify for Medicaid—by promising to pay five percent more of those states’ Medicaid costs for the next two years.

Medicaid program costs are split between states and the federal government. The exact ratio of funding varies by state based on a formula called the Federal Medical Assistance Percentage (FMAP). The federal matching rate ranges from 50 percent in Wyoming to nearly 80 percent in Mississippi