IT’S ONLY OTHER PEOPLE’S MONEY: Medicaid’s ‘perverse incentives’ tanking Colorado’s budget.

As economist Linda Gorman recently explained, the rapid 2010 expansion of Medicaid did not produce large gains in physical health, suggesting that the new expansion enrollees were mostly healthy people not in need of taxpayer-subsidized healthcare.

Because Medicaid spending in Colorado is mostly driven by enrollment, Gorman suggests the legislature target the bloated rolls to close the state’s budget hole and make healthcare spending more affordable and sustainable.

The Paragon report adds to that by noting Medicaid is “plagued by perverse incentives” that are fundamental to the programs’ structure due to its open-ended federal reimbursement of state spending.

“The policy encourages states to spend more to receive more federal money, leading to the proliferation of financing schemes that function as de facto money laundering mechanisms to obtain federal funds without commensurate state expenditures,” the report reads, in part. “The Affordable Care Act’s 90 percent federal reimbursement rate for able-bodied, working-age adults—providing roughly seven times more federal funding per state dollar than for traditional Medicaid enrollees—has diverted resources away from the truly needy.”

In Colorado, this has led to health care eating up one third of the state’s budget, quickly crowding out other budget priorities.

Exit quote: “It remains ultimately up to Colorado legislators to address the program’s systemic issues.”

I get the feeling that Medicaid grift and fraud are Denver’s budget priorities.