Psst, have you heard about the new cheat code? It isn’t about slaying computer-generated dragons. It’s about gaming the federal Treasury—and states are rushing to cash in before Washington shuts the gimmick down.
The scheme targets Medicaid, the nationwide safety-net health plan for the low-income and disabled, in which Washington pays between 50% and 80%, depending on a state’s relative wealth. State governments have long milked this matching system by levying bespoke taxes on healthcare providers and pumping some of the revenue back into Medicaid. This recycling process conjures extra cash for both the state and its health industry by putting a double hit on the federal government: First, the feds underwrite half or more of the taxes collected from Medicaid providers, then they provide yet more matching aid when the money flows back as Medicaid spending…
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