Medicaid Windfall Cut N.H. Deficit: State Officials Used Loophole While Bloating U.S. Budget
The state of New Hampshire isn't high on most lists of culprits contributing to the huge federal budget deficit.</br></br>Long dominated by fiscal conservatives wary of the evils of deficit spending and big governmentÛÓand critical of the spendthrift ways of neighboring ÛÏTaxachusettsÛÛÓit is one of only two states with neither a sales tax nor a general income tax.</br></br>But since 1991 New Hampshire has been able to preserve its unique low-tax status thanks largely to a loophole in Medicaid law that enabled its Republican leaders to get the taxpayers of the United States to cover a yawning state budget deficit.</br></br>ÛÏIt was a scam, no question about it,Û said Douglas E. Hall, a Republican state legislator who helped devise the scheme in 1991 but now feels it enabled New Hampshire to postpone dealing with its underlying fiscal problems. ÛÏWe're funding our state judicial system, our highway program and everything else out of a Medicaid loophole, which is being funded out of the [federal] deficit.ÛªÛª</br></br>In Medicaid, the federal government partially * reimburses states for their payments to hospitals, doctors and other providers of care to the medically needy. The reimbursements are based on a formula that varies depending on the wealth of a state. New Hampshire gets 50 cents See NEW HAMPSHIRE, A6, Col. 1