Mark Kilmer of the Maryland Public Policy Institute writing in the Baltimore Sun notes that the O’Malley administration may have a bigger budget problem than it thinks it has (hat tip to Cato at Delmarva Dealings):

Maryland’s lawmakers need to pay close attention to the state’s dispute
with the federal government over Medicaid. Maryland has been using a combination
of state and federal Medicaid dollars to pay for a variety of services for
children in special education. The federal government is now saying some of
these payments were improper and wants its money back.

This disagreement illustrates an often-overlooked fact about Medicaid:
The federal government is looking for ways to reduce its Medicaid spending. That
does not bode well for those looking to expand Medicaid in our state.

Proponents of expanding state health care coverage contend that the
federal government always pays for a large portion of any new spending. In other
words, Maryland can essentially get “free” money for its health care spending.
This was a key part of the plan put forward by the Health Care for All Coalition
and many during this year’s session of the General Assembly. It called for a
large expansion of both Medicaid and the Maryland Children’s Health

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There really is more below the fold…

The implications of this are enormous.

The odds of the feds collected misspent largess is fairly slim but the odds that they will prevent Maryland from misusing the funds in the future is substantial. This means that the $1.5billion will quickly balloon upwards because the idea of the governor cutting illegally funded programs “for the children” is just absurd.

This will require more hard choices this administration seems indisposed to make or it will take the easy way out of pushing for a tax increase. And while we’re at it, just a little bit more will cover all these great new programs the people really NEED.

TANSTAAFL: There Ain’t No Such Thing As A Free Lunch

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