One of the most perverse consequences of the feverish backroom deals used to get Obamacare past the finish line was the funding formula for the law’s Medicaid expansion, which started with the infamous Cornhusker Kickback, a sweetheart deal for Nebraska alone to get 100 percent federal funding for Medicaid expansion that was used to get then-Senator Ben Nelson’s vote.
When the whistle was blown on that dirty deal, Nelson implausibly explained that the Nebraska-only provision was intended to be a “placeholder” for higher Medicaid funding for all 50 states. And that’s what ended up ultimately passing: if a state expands Medicaid to able-bodied adults, the new population is eligible for 100 percent federal funding through 2016, phasing down starting in 2017 until it reaches 90 percent in 2020 and permanently thereafter.
Yet states continue to receive an average of 57 percent federal funding for the pre-expansion Medicaid population of needy families and people with disabilities. In short, under current law, states are given a huge financial incentive to favor able-bodied adults over the truly needy. It’s shameful and it should be fixed.