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35 states got too much stimulus funding

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Mark Tapscott,Watchdog Blog

Thirty five of the 50 states got more economic stimulus funding to help them with their Medicaid budgets than they should have, according to the Inspector General of the U.S. Department of Health and Human Services (HHS-IG).

Approximately 90 percent of all federal formula-based aid to the states goes for Medicaid spending, which means even a slight increase in the amount of Medicaid aid from Washington to the states can make a significant difference in the fiscal burden placed on a jurisdiction. So to help cash-strapped state governments during the Great Recession of 2008, the Obama administration included a temporary increase in the percentage of Medicaid funding sent to state governments for the last quarter of that year.

Great idea, but, as so often happens in political bureaucracies, somebody forgot a key factor that should have been included in calculating how much each state would actually get. As a result, officials "retroactively provided additional Federal funds for the first Recovery Act quarter by applying the increased percentage to expenditures each State had already submitted; however, CMS did not include collections, which reduce a State's expenditures, in that calculation."

In other words, a state's collections for improperly paid Medicaid claims should have been counted against the amount being given to the state under the economic recovery program, with a consequence that 35 states "did not appropriately recalculate the Federal share for the remaining $292.7 million in collections ... As a result, they retained $25 million in increased Recovery Act funding," the HHS-IG report said.

Confusing? That's because it is. It almost always is when governments are spending tax dollars. Go here for the full report. It may only involve $25 million, but when the government is $16 trillion in debt, every penny counts, right?

Mark Tapscott is executive editor of The Washington Examiner.

Piggybank photo by flickr user 401(k)2012, used under a Creative Commons license.

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