...According to Smith, the stimulus bill contains over $100 billion of temporary Medicaid money. In an unprecedented use of Medicaid, that money will go to provide medical coverage for 1.2 million unemployed workers. What happens to those people in two years, when most of the temporary federal funding ends, is a major question. It will eventually lead to huge budget shortfalls when the federal spigot shuts off.
“It’s going to be very serious,” Smith says. “The GAO, the watchdog agency that works for Congress, has already said the current Medicaid program is unsustainable, and that states for the current program have to either cut spending or raise taxes by 7.6 percent every year to stay in balance.”
After the federal money is gone, Smith says, states will have to either drop millions of people from the rolls or face massive shortfalls. That probably means they’ll soon be back at the federal trough pleading for more money.
How does that stimulate the economy???!!!