Before Argentina’s 2001 financial collapse, its provinces embraced a dangerous habit: spending locally and sending the bill to the national government. The U.S. Medicaid program turbocharged similar fiscal free-riding during the Biden administration. Using provider taxes and state-directed payments, states maximized their draw from the national treasury while federal taxpayers bore the burden.

States first tax healthcare providers such as hospitals, nursing homes, and managed care plans. Then they use provider tax revenue to secure several times more in federal matching dollars, cycling the combined funds back to providers through state-directed payments.

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