Last 8 months Over 11 million people They were removed from Medicaid after a coronavirus-era provision guaranteeing continued coverage expired. As states reset Medicaid enrollment slots while working to ensure needy beneficiaries can participate in the program, federal policymakers are correcting long-standing inequities in how health care programs are funded. We should seize the opportunity to do so.as my new research Clearly, wealthier states with healthier populations are reaping more than their share.
Although broad federal guidelines apply nationwide, Medicaid is primarily structured and administered by each state. As a result, some states allow Medicaid enrollees to enjoy a wide range of benefits, including optometry services, chiropractic care, and physical therapy, while others place strict limits on the types of services that can be covered. State eligibility regulations also vary widely. For example, in Alabama, Parents seeking security Connecticut allows parents to earn up to approximately $40,000 a year.
These differences are partly rooted in political attitudes toward support for the poor, but policies are also shaped by state fiscal constraints. Each year, the federal government sends more than $600 billion to states, about 10 percent of their total budget, to ensure a basic health safety net exists across the country. But the rules that determine how much money states receive are outdated and counterproductive, often funneling more resources to wealthy states than to those in desperate need of additional funding.
The amount of federal Medicaid funding each state receives varies widely, based on a set of rules first devised in 1965 and largely unchanged over the past 60 years. For example, in 2019, Alaska and the District of Columbia received more than $20,000 in federal Medicaid funds per resident living below the poverty line, while Georgia received less than $5,000.
Some funding disparity may be justified if more federal aid goes to states with fewer means to generate their own revenue or those with more acute health care needs. But that's not the case. My new research finds that Medicaid's current financing structure consistently undermines Congress' intent to equalize state contributions to Medicaid.
For example, we find that states with larger tax bases receive significantly more federal Medicaid than other states. Wealthy Connecticut is one such state. In 2019, each poor person received about $15,000 in federal Medicaid funds. Meanwhile, Mississippi, which has the smallest tax base per poor person, receives only half of the federal Medicaid aid. These are not cherry-picked examples. Other states with large tax bases, such as Maryland, Massachusetts, and New York, also receive a disproportionate share of federal Medicaid dollars, while states with fewer tax resources, such as Alabama, Georgia, and Oklahoma, receive a disproportionate share of federal Medicaid dollars. Far less aid is being allocated per person.
Federal funding also fails to reflect how healthy a state's Medicaid population is. Hawaii, the state with the healthiest poverty, received more funding in 2019 than Kentucky, the state with the healthiest poverty.
None of this makes any sense. Instead of making up for differences in states' ability to finance the health safety net, federal Medicaid funding amplifies them.
Congress should act to correct these deficiencies. One option is to eliminate arbitrary limits on the total amount of Medicaid spending covered by the federal government. Currently, every state, no matter how wealthy, pays only 50 percent of the cost of its Medicaid program. Requiring wealthier states to contribute more would save the federal budget, which could be used to increase aid to states with higher needs.
Another, more ambitious approach would be to fundamentally reform the Medicaid formula to incorporate more accurate measures of state financial resources and health care needs. The current formula is based entirely on average personal income and does not capture all the factors that determine Medicaid costs.
Either approach would improve upon current practices. By failing to address Medicaid's regressive funding structure, Congress is contributing to alarming disparities in health care services available to poor families across the country.
Liam Cigo I am a Graduate Research Fellow in the Open Health Project at George Mason University's Mercatus Center.
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