Medicaid’s Joint State-federal Funding Scheme Rewards Overspending

In a new blog post, Cato budget policy expert Dominik Lett says, “As House Republicans take steps to advance their tax reform package this week, fiscal hawks have been raising the alarm about Medicaid’s broken financing formula. Medicaid’s joint state-federal funding scheme actively rewards overspending, resulting in programmatic bloat, wasted taxpayer dollars, and fraud.” Addressing how the current Medicaid funding structure fuels waste and abuse, Lett argues in Medicaid’s Funding Formula Rewards Overspending and Fuels Fraud that unless reformed, “states’ abuse of financing gimmicks, and uncapped federal spending” will continue to distort the system and burden taxpayers.