John Hood joins the chorus against the latest Medicaid bailout, which could leave North Carolina with a $500 million budget gap to fill immediately (not to be confused with the potential $3 billion gap next year).
Robert Inman, in a new working paper, adds two more reasons to oppose the bailout. First, the overall stimulus bill passed last year directed $0.77 of every dollar to new programs. Extending this argument, federal Medicaid payments give the greatest boost to states with the biggest Medicaid programs, such as New York. Second, “states will only have the incentive to save … if Congress can credibly commit to no future bailouts in times of fiscal distress.” The only way to make that commitment credible is to stop the bailouts at a time of fiscal distress, like now.
