Oh, what a tangled web we have woven.
When central planners implement unwise public policy based on flawed economic reasoning, the civil society suffers negative fallout.
So when we combine the price-distorting effect of Medicaid rate setting combined with tax-payer funding of “premiums”, you necessarily get over-utilization of resources in communities which are already maximizing their output. Cries for financial support are inevitable, which was the genesis of DSH program.
Economic distortions beget often unforseen negative economic fallout; the political solution to the negative fallout is yet more unwise tinkering with the market.
And this is how we dig ourselves into these ever-deepening public policy holes.
Eventually, we have to pay the piper as the red ink accumulates. But alas, it is too painful and the can-kicking begins with legislative reprieves & delays. Sounds like the SGR policy dilemma of the 1990s.