SALON

Sunday, Oct 14, 2012 8:28 PM UTC

Law professor: Romney exploited federal spending loophole in Mass.

A scathing op-ed in the Boston Globe explains then-Governor Romney's "Medicaid shell game"

By

Topics: Massachusetts, Regulation, Health Care, Mitt Romney, Daniel Hatcher, , , , ,

Law professor: Romney exploited federal spending loophole in Mass.Republican presidential candidate and former Massachusetts Gov. Mitt Romney campaigns in Lancaster, Ohio. (AP/Charles Dharapak, File) (Credit: AP)

Mitt Romney and running mate Rep. Paul Ryan R.-Wis. have been tough critics of federal spending during their run for the White House. But just as Ryan wasn’t shy about asking for stimulus money for Wisconsin, an October 12 Boston Globe op-ed explains how Romney exploited a regulatory loophole when he was governor of Massachusetts to attract excessive federal Medicaid funds without necessarily using them for their supposed purpose: health care for the poor.

Daniel Hatcher, associate professor at the University of Baltimore School of Law, called the approach:

Akin to tax schemes using offshore bank accounts — but instead of avoiding federal taxes, seeking to pilfer the federal treasury. The Wall Street Journal labeled such financing mechanisms “Medicaid Money Laundering” and a “swindle.”

…Buried in his 2004 budget, Romney proposed maximizing federal aid by taxing hospitals, shifting the resulting tax payments in and out of an uncompensated care fund, back to hospitals as adjustment payments, and diverting resulting federal Medicaid funds to state general revenue. He also proposed using taxes on nursing homes and pharmacies in his efforts to maximize and divert federal aid.

Romney’s strategy attracted attention from the U.S. General Accounting Office, which:

Responded that “hospitals should benefit from increased federal reimbursements and Massachusetts’s arrangement appeared to result in lower payments to hospitals, despite increased claims for federal reimbursement.”

In a conversation with Salon, Hatcher said that these practices are not limited to Romney’s Massachusetts. However, while the Bush and Obama administrations attempted to crack down on this approach, Romney’s campaign promises to enable it:

Mitt will begin by returning states to their proper place in charge of regulating local insurance markets and caring for the poor, uninsured, and chronically ill. States will have both the incentive and the flexibility to experiment, learn from one another, and craft the approaches best suited to their own citizens.
*Block grant Medicaid and other payments to states
*Limit federal standards and requirements on both private insurance and Medicaid coverage

In the Globe piece, Hatcher concludes what the likely consequences will be:

Romney 2004 proposed cutting healthcare while simultaneously proposing illusory schemes to maximize and divert federal Medicaid funds. … Now Romney2012 is turning back to cuts, denouncing federal aid he once schemed to maximize and divert, condemning those who need government aid, and … now he proposes giving all the federal money from the Medicaid program to states without federal control.

Romney 2004 would have a field day with Romney 2012’s plan.

The Romney campaign did not respond to a request for comment.

Alex Halperin is news editor at Salon. You can follow him on Twitter @alexhalperin. More Alex Halperin.

Next Article

Related Stories

More Related Stories

Featured Slide Shows

The week in 10 pics

close X
  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11
  • Lisa Montgomery embraces her nephew Thursday after a tornado tore apart her home in Cleburne, Texas. The twister killed six people and destroyed entire swaths of the North Texas town.
    Credit: AP/LM Otero

  • Jack McMahon, the defense attorney for abortion doctor Kermit Gosnell, speaks outside the Criminal Justice Center in Philadelphia Tuesday. His client was convicted of killing three babies in his clinic, and will serve multiple life sentences.
    Credit: AP/Matt Rourke

  • A photo taken Monday captures Vice President Joe Biden's response to a Milwaukee second-grader's innovative proposal to end America's epidemic of gun violence. This guy!
    Credit: AP/Jenny Aicher

  • Sen. Rand Paul, R-Ky., flanked by a grouper-eyed Michele Bachmann, addresses the IRS' admission that it targeted Tea Party groups in advance of the 2012 election. In an op-ed for CNN Thursday, the Kentucky senator slammed the president for his faux outrage.
    Credit: AP/Molly Riley

  • Ousted IRS chief Steven Miller is sworn in on Capitol Hill Friday. Miller testified before the House Ways and Means Committee on the extra scrutiny the agency gave conservative groups applying for tax-exempt status.
    Credit: AP/J. Scott Applewhite

  • Attorney General Eric Holder pauses as he testifies on Capitol Hill before the House Judiciary Committee Wednesday. Holder is under fire, among other things, for the Justice Department's gathering of phone records at the Associated Press.
    Credit: AP/Carolyn Kaster

  • O.J. Simpson sits during an evidentiary hearing at Clark County District Court in Las Vegas, Nev., Thursday. Simpson, who is currently serving a nine-to-33-year sentence in state prison for armed robbery and kidnapping, is using a writ of habeas corpus to seek a new trial.
    Credit: AP/Las Vegas Review-Journal/Jeff Scheid

  • Major Tom to ground control: On Sunday astronaut Chris Hadfield recorded the first music video from space, a cover of David Bowie's "Space Oddity."
    Credit: AP/NASA/Chris Hadfield

  • When it rains it pours. President Barack Obama speaks during a news conference Thursday with Turkish Prime Minister Recep Tayyip Erdogan, inexplicably inspiring an #umbrellagate Twitter meme.
    Credit: AP/Jacquelyn Martin

  • A smoke plume rises high above a road block at the intersection of County A and Ross Road east of Solon Springs, Wis., Tuesday. No injuries were reported, but the the wildfire caused evacuations across northwestern Wisconsin.
    Credit: AP/The Duluth News-Tribune/Clint Austin

  • Recent Slide Shows

  • Share on Twitter
  • Share on Facebook
  • Thumbnails
  • Fullscreen
  • 1 of 11

Related Videos

Comments

 17 Comments

Comment Preview

Your name will appear as username

You may use these HTML tags and attributes: <a href=""> <b> <em> <strong> <i> <blockquote>

follow salon

Most Read

Popular on Reddit

links from salon.com

vote
Who is "Company Doe"? Corporations accused of wrongdoing win battle to keep identities secret
32 points33 points | comment
vote
"Slave descendants seek equal rights from Cherokee Nation": long, detailed narrative of legal and historical complications in red-white-black relations
29 points30 points | 1 comment
vote
Who is "Company Doe"? Corporations accused of wrongdoing win battle to keep identities secret
4 points5 points | comment
vote
Experts: Fox News spying scandal a game-changer - I think that crackdown is ideologically driven and I think it’s hard to come to a different conclusion given the vigor with which this justice department has gone after people. So I think it is about a method of control that is badly misplaced.
2 points3 points | 6 comments
vote
So apparently the American government can weaponize the weather...
3 points4 points | 2 comments

From Around the Web

Presented by Scribol
listener_new_rect The Listener: So long, Sookie Stackhouse

Recommendations