It looks like Ohio tried to use some tax trickery [PDF] to fund ♡bamaCare!!! Medicaid expansion in the Buckeye State:
The key revenue stream in question is the state sales and use tax as applied to Medicaid managed care organization (MCO) premiums. The state takes advantage of a loophole in the Medicaid funding system through which taxing these premiums provides revenue to the state and increases the amount of federal grant money that Ohio receives. Thus far, this tax loophole has cost the federal government hundreds of millions of dollars, and allowed Ohio to reduce its share of total Medicaid expenditures and spend even more. But that loophole is about to close.
A recent investigation by the Office of the Inspector General of the Department of Health and Human Services (OIG) should warn states like Ohio currently using the loophole to fund expansion. Responding to OIG, the Centers for Medicare and Medicaid Services (CMS) stated it intention to bring wayward states into compliance. This means that Ohio will likely need to abolish its sales tax on Medicaid MCO premiums, and lose the critical revenue it provides.
The link is from Kristina Ribali and she explains things further:
It’s a slick system. So slick, in fact, that other states have tried it. For instance, Pennsylvania tried it and got a whopping $1.76 BILLION in extra federal grants over a three year period. The only problem – it’s illegal. In fact, this was already decided before Ohio tried it.
The Buckeye Institute’s President, Robert Alt, urged Ohio state lawmakers to pass a budget without Medicaid expansion. The testimony was successful, but Governor Kasich bypassed the State House and expanded Medicaid anyway via the Controlling Board – complete with this sketchy funding mechanism.
This is just going to kill whatever is left of Kasich. He made his name as a principled small-government conservative, almost libertarian, then threw that out when he saw the gleaming gobs of reverse-Danegeld hiding the manure pile known as ♡bamaCare!!!. Whatever remains of his reputation could be forever tarnished by this illegal funding gimmick.
I really used to like and respect him, too.