Medicaid as a Costly Program with Strange Incentives

Medicaid, a program designed to grow since its inception, has become one of the largest parts of the federal budget. It distorts state incentives to spend their own funds reasonably and shows a lack of concern for controlling overall spending. Strange incentives in the program have caused spending to escalate, starting from the beginning when New York State discovered there was no income limit to be considered 'low income.' With the Obamacare rollout, upfront spending increased, giving states an even larger incentive to expand eligibility. However, spending more on Medicaid does not necessarily lead to better health outcomes, as states with higher Medicaid spending do not have better results in areas like low birth weight.