Medicaid expansion supporters usually claim that because North Carolina did not expand Medicaid, North Carolina’s federal taxes are funding another state’s Medicaid expansion.
True. But even before Obamacare’s optional Medicaid expansion, North Carolinians who pay federal taxes were already funding other state Medicaid programs. And federal taxpayers in other states were funding North Carolina’s program. That’s how Medicaid works – it is a jointly funded program by the state and federal government.
Avik Roy, author of “How Medicaid Fails the Poor”, further explains Medicaid’s federal match rate:
The fact that Medicaid is jointly funded by the states and the federal government has had a consequential role in its evolution. The share that states pay, relative to Washington, is determined by a formula called the Federal Medical Assistance Percentage (FMAP).Title XIX of the Social Security Act, which now contains the Medicaid program, specifies that the federal government will contribute no less than 50 percent of a state’s Medicaid costs.
“That means that for every dollar a state spends on its Medicaid program, the federal government will kick in an additional $1.50. It’s not everyday that a state politician gets to spend one dollar of his constituent’s money and gain credit for spending $2.50 in return. But that’s how Medicaid works. As a result, irresponsible officials in many states have ratcheted up their Medicaid spending, knowing that taxpayers in other states will be forced to foot a good chunk of the bill”.
Obamacare is bad policy. North Carolina state leaders rejected Medicaid expansion for sound reasons. Instead of adding more individuals onto a poorly run medical assistance program, the state is now focusing on reform and NOT adding to the federal deficit.