1 out of 3 New Yorkers is on Medicaid:
…the states set the level of Medicaid spending, but the Feds match the states dollar for dollar. New York State decided that a good way to soak up extra Federal money was to require the local governments to match the state, dollar for dollar. Since the Feds match all state and local spending, this had the effect of doubling Medicare spending in the state of New York, at no cost to the state, other than the psychic anguish of its highly taxed citizens.
By the end of 2004 Medicaid spending will cost $1650 per person in New York City.
My Arnold Kling-like question: If every distortion of this kind were eliminated, how much would the price of medical care fall?