Republicans in Congress don’t have to look far to save taxpayers money. As the Senate prepares to take up the reconciliation bill passed by the House, it should focus on the nation’s capital, which has a sweetheart deal on Medicaid that bilks federal taxpayers while benefiting D.C.’s rich lobbyists and lawyers. The current bill doesn’t touch it, but as I show in a new study, repealing this costly and unfair deal will save nearly $10 billion over the next decade, while striking the right kind of populist notes.
D.C.’s Medicaid deal has been in place since 1997, when Congress passed a law that funds 70% of the supposedly low-income healthcare program in the city. Under the normal federal matching rate, such a high percentage would only go to lower-income jurisdictions. Arkansas, with a per capita personal income of less than $60,000, has a 69% matching rate. New Mexico is nearly at 72%, and it has a per capita income of roughly $57,000. These states arguably need the higher money to cover the costs of their low-income residents.
But D.C. doesn’t need the money — because it’s rich. In fact, it’s the richest jurisdiction in the United States, with a per capita income of $108,233. The city is filled with people who’ve become wealthy through their proximity to the levers of power, and more to the point, their ability to influence how and when those levers are pulled. The fact that D.C. is so wealthy makes its Medicaid matching rate not only an outlier, but an unjust exception to the national rule.
Under federal law, states with higher incomes get a 50% matching rate. That’s the case for Massachusetts — the wealthiest state with a per capita income of more than $90,000 — which gets a dollar in federal money for every dollar it spends.
