by Katherine Restrepo
John Locke Foundation
July 31, 2014
The flaws in our half-billion-dollar Medicaid program stem from the way in which it is funded, as both state and federal government share the bill. North Carolina’s $14 billion Medicaid program currently pulls down a 65 percent federal match — well above the national average. Federal funding creates a strong disincentive for North Carolina to flush out waste in the system, since a hefty portion of any savings reverts back to the feds. The state could use excess federal funds for budget purposes not limited to Medicaid. If Medicaid’s federal share was transferred to North Carolina as an annual block grant, the state would have to shoulder more program costs. But such an injection of fiscal responsibility would allow lawmakers to exercise more control over the program and create a stronger incentive to sort out system waste and abuse.

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