Thom Tillis Defends a Medicaid Scam

In a speech to his colleagues, Tillis revealed that the Senate Republicans’ budget would end the scam by which the senator’s home state is forcing you, me, and taxpayers in every other state to fund its Obamacare Medicaid expansion. Tillis pledges not to vote for any budget unless it allows North Carolina to keep fleecing you.

A little explanation is in order.

Each state operates a Medicaid program that offers health care subsidies, ostensibly but certainly not exclusively to the poor. Congress contributes to each state’s Medicaid program in a manner that guarantees explosive spending and excessive waste, fraud, and abuse. For every $1 a state puts toward Medicaid, Congress matches it with something between $1 and $9. The premise is that Congress will contribute if the state sacrifices something to fund its program. Already, this is a boon to state officials. If they raise taxes by $1 — inflicting $1 of political pain — Medicaid lets them hand out $2 to $10 of political goodies. (The difference comes from taxpayers in other states.) Little wonder that Medicaid spending has doubled since 2013.

Some state officials have fashioned an even sweeter deal for themselves. They, ahem, “tax” hospitals or other health care providers $1, use that dollar to extract $1 to $9 in federal matching funds, then give the original $1 back to the hospital. Voilà! These so-called provider taxes let states siphon hundreds of billions of dollars from taxpayers in other states, using the federal government as conduit, without sacrificing anything. The purpose of “provider taxes” is to enable state officials to deceive, rob, and avoid democratic accountability. It sullies the reputation of money-laundering — which can sometimes be virtuous or even a moral duty — to associate it with Medicaid “provider tax” scams.

North Carolina uses these scams to fund the entirety of its Obamacare Medicaid expansion. Basically, you are funding more of North Carolina’s Obamacare Medicaid expansion than is the State of North Carolina, which isn’t putting up a dime. State law says that if North Carolina ends up having to sacrifice anything to pay for its Obamacare Medicaid expansion (i.e., if its “provider tax” and similar scams fall short of covering 100 percent of the state’s 10 percent share of program spending), then Obamacare’s Medicaid expansion there dies. The Senate’s proposed budget wouldn’t end “provider taxes,” but it would curtail them enough to trigger that part of North Carolina law.

Consider what it means that Tillis is trying to stop that from happening.

For 14 years, North Carolina refused to implement Obamacare’s Medicaid expansion because state officials did not want the state to pay even that small 10 percent share of program spending that federal law specifies. Obamacare’s Medicaid expansion was so unpopular that voters and legislators — including then–North Carolina House Speaker Thom Tillis! — weren’t even willing to buy it at one-tenth of its price.

In 2023, Obamacare supporters (read: every Medicaid-supplicant hospital in the state) finally got the legislature to approve the expansion by (1) concocting a Medicaid-financing scam, which ensured that taxpayers in other states would pay the entire cost, and (2) including a statutory kill-switch that would scuttle the program if it ever cost the state anything. Legislators could always kill the kill-switch. But that would require raising taxes. Tillis and North Carolina’s overpriced hospitals rightly fear that if Tar Heel State voters see even a fraction of the cost of Obamacare’s Medicaid expansion, it would not withstand their wrath.

Which brings us to Medicaid’s dirty little secret: it is undemocratic and therefore inherently politically unstable.

The entire purpose of the matching-grant system of federal Medicaid funding is to encourage states to expand their programs beyond what their residents are willing to support through their taxes. That system guarantees that Medicaid outlays will reach levels that lack voter support and that health care subsidies for the poor will be under constant threat from voters. These perverse incentives — and the activists who are fighting spending restraint and democratic accountability — are driving the federal government toward a debt crisis that would devastate Medicaid enrollees.

Now you tell me who the compassionate people in this debate are.