Federal Funds are the Crack Cocaine of Health Care Policy

Posted by Joseph D. Coletti in West Virginia on Sep 4th, 2009 | no responses

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Federal funds help state officials expand public programs–woohoo, we can cover more uninsured!–but at a price. In brief, they are deep-discounted teasers. The feds offer, at worst, a 50/50 match. Should the state ever seek to restrain costs by pulling back that expansion, it also loses the federal matching fund. But because of the match, it has angered twice as much money as it would have otherwise.

I thought of all this when I read that West Virginia will get a $6.3 million grant to "support the expansion of health-care coverage for uninsured residents." In this case, the match is much higher (80%). So the state pays only 20% of the cost.

There's a catch. The grant is for five years. I'm guessing that after that point, West Virginia will have to pay 100%.Will the state have the money to take over the extra responsibility?

It sounds a bit like working at a minimum-wage job, taking out a large loan with a balloon payment after 5 years, and hoping that you'll be sitting in the corner office by then.

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