Welcome to the Rest of the Decade: Fiscally Strained States All Want More Money for Medicaid

Is it finally handout time for the states? They're certainly hoping so. The Washington Post reports that the National Governors Association is still calling on Congress to extend the temporary funding boost for Medicaid included in the stimulus. As I pointed out a couple of weeks ago, issues like this and the "doc fix" reveal the problem with "temporary" funding bumps; once a revenue stream is established, no one ever wants to give it up. With a massive expansion of Medicaid on the way, we can look forward to a lot more of this. Yet as Tennessee's 2005 decision to scale back its Medicaid program—after a a radical expansion of the program swelled its budget —suggests, scaling back can be the best choice for long-term fiscal stability. Scaling back, though, is always tough in a political system that rewards legislators who focus on providing easy goodies at the expense of long-term stability. In some ways, it's similar to the problem that Massachusetts is facing in reforming its fee-for-service health care payment system:  just about everyone pays lip service to the idea that we need to cut medical spending, but no one wants their services or payments to be cut.