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Targeting states to expand Medicaid

The COVID bribe would increase the federal match for non-expansion recipients by 5% the next two years in states that haven’t expanded Medicaid, plus Missouri and Oklahoma. That’s not taking the 90%FMAP for the roughly 500,000-person expansion population to 95%, but taking the pandemic-enhanced 73.85% to 78.85% (67.75% and 72.75% beginning the quarter  after Biden ever declares the emergency over) for the 2 million people already on Medicaid.
The Center for Budget and Policy Priorities (CBPP) estimates North Carolina would get an extra $2.4 billion over two years as a result, on top of the extra money it has been receiving because of the pandemic. Since this is money the state already spends, you can expect Cooper would just use it for other recurring operating expenses. That would mean a two-part hit to the state budget if it spent everything possible, losing $1.5 billion after the pandemic health emergency ends later this year or in early 2022, then another $1.2 billion in FY2023-24 when the expansion bonus expires. Expansion was already a bad idea. This makes it downright dangerous for state taxpayers.
It is worth noting that Congress here is willing to aim incentives at a few states, but feels it must force every state to take “assistance” so it can bail out a smaller number of fiscally troubled states.

Joseph Coletti / Senior Fellow, Fiscal Studies

Joe Coletti is a senior fellow at the John Locke Foundation focused on fiscal policy issues. He previously headed the North Carolina Government Efficiency and Reform initiativ...