California politicians love to brag. GDP near $4 trillion. “Fourth-largest economy in the world.” Progressive pundits cite those numbers as proof that big government works.
But behind the glossy stats sits a system bloated with grift, distortion, and federal abuse. Nowhere does that dysfunction show more clearly than in California’s shell game with Medicaid reimbursements — a sleight of hand known as intergovernmental transfers, or IGTs.
Any private-sector CEO who ran a company like this would face prosecution. In Sacramento, these people get re-elected.
At first glance, IGTs look benign. Counties, fire districts, and public ambulance providers send money to California’s Medicaid program, Medi-Cal. The state then uses those funds to draw matching federal dollars.
In theory, it’s a cost-sharing mechanism to support care for low-income patients.
In practice, California weaponizes IGTs as a legalized money-laundering scheme. The state punishes private providers, guts rural health care, props up political patrons, and hides it all behind the banner of equity.
Here’s how the racket works: Private ambulance companies get stuck with the standard Medicaid reimbursement rate — $118 per ground transport. Public agencies, including fire departments and county EMS units, receive up to $1,400 per run. Same patient. Same service. Ten times the payout.
This isn’t health care policy. It’s a rigged system.
Private ambulance companies can’t compete. Most operate at a loss in low-income and rural regions. Once they go under, they don’t get replaced. The 911 calls still come — but the ambulances come slower. Or not at all.
And in emergencies, minutes cost lives.
California’s IGT scheme isn’t just a technical policy failure. It’s a public safety crisis disguised as social justice.
The people paying the highest price are the working poor — the same communities Sacramento claims to champion. These residents live in neighborhoods left uncovered. They suffer delayed response times. They watch public-sector unions cash in while their own emergency care collapses.
Meanwhile, the state expands Medicaid to undocumented immigrants — ignoring federal guidelines — while using IGTs to balance the budget. These patients can’t legally receive full Medicaid benefits, but California finds the loopholes. State officials cook the books to collect federal money anyway.
It’s a violation of the law. No one stops it.
Sacramento calls this fiscal ingenuity. Washington looks the other way. In truth, it’s federal fraud.
The cash goes to public agencies, which funnel it into inflated salaries, no-show contracts, and political favors. Rural ambulance crews shut down. Small hospitals cut staff. And working-class Californians wait longer to get help they used to take for granted.
Any private-sector CEO who ran a company like this would face prosecution. In Sacramento, these people get re-elected.
This isn’t bureaucratic inertia. It’s engineered corruption. California’s 2024 and 2025 State Plan Amendments codify this scheme in black and white. They grant preferential reimbursement to government providers while sidelining the private sector completely.
That’s not policy. It’s pay-to-play.
And it’s working exactly as intended: Drive out private actors, centralize control, and soak the federal treasury while calling it compassion.
The fix is simple. Enforce federal Medicaid law. End special treatment for public agencies. Level the field so private ambulance companies — especially in rural areas — can survive.
Without reform, the collapse continues. The IGT scam rewards states for padding GDP with fake Medicaid spending. It rewards failure. It punishes success. And it leaves real people — sick people, poor people — waiting for ambulances that never come.
California can keep calling itself the world’s fourth-largest economy. But those numbers mean nothing when the foundation is rotten.
The ambulance isn’t coming. The budget is built on lies. And Gavin Newsom is on television doing Baghdad Bob impressions while the system falls apart.
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