The Lottery Mystery Is Solved!


Earlier this week I noted that one-tenth of the Republican health care bill is taken up with a provision that denies Medicaid coverage to lottery winners. I figured it was just Republicans being Republicans, ever watchful for some poor person who’s gaming the system and getting something they don’t deserve. But no. The Rude Pundit point out—very rudely!—that the real reason is more prosaic. Here’s a snippet from a CBO report released a couple of years ago:

It turns out that Republicans aren’t just being dicks. They’re also playing the CBO scoring game. Half a billion dollars may not be much over ten years, but it’s better than nothing. And if you can help your CBO score and stick it to some poor schmoe who won the lottery—well, that’s just a win-win, isn’t it?

OK, BUT SERIOUSLY FOLKS: This isn’t quite the real story, though it’s true that Republicans really are sort of obsessed with making sure no poor person ever gets a penny more than they deserve. Michigan was the trendsetter here. After the great midterm landslide of 2010 gave Republicans total control of the state, they passed a law requiring state agencies to automatically cross-check lottery winners with people receiving welfare benefits. The result was a lovely report about the “truly needy”:

Now, you may be thinking that this is pointless since Medicaid has an income test, and lottery winnings count as income. So if you win the lottery, you don’t qualify for Medicaid anyway.

But no! Not anymore, anyway. For complicated reasons—explained here in unbelievable detail if you really want to torture yourself—Democrats were forced to change the Medicaid rules in Obamacare so that lottery winnings counted as income only in the month they were received. That means you’d be ineligible for Medicaid that month, but then you’d go right back on Medicaid the next month even though you had this huge pile of lottery cash available to you.

Fixing this rank injustice became a hobbyhorse of Rep. Joe Pitts (R–Penn.), who introduced multiple bills designed to change Obamacare’s rule. Pitts retired last year, but no matter: other Republicans are now selflessly carrying on his work. And the complexity of this rule explains why lotteries take up six pages in their bill. It’s not just a matter of kicking lottery winners off the Medicaid rolls. Republicans have to define in detail how lottery income is handled. Lots of detail:

A State shall…include such winnings or income…as income received in the month in which such winnings or income (as applicable) is received if the amount of such winnings or income is less than $80,000….over a period of 2 months if the amount of such winnings or income (as applicable) is greater than or equal to $80,000 but less than $90,000….over a period of 3 months if the amount of such winnings or income (as applicable) is greater than or equal to $90,000 but less than $100,000….over a period of 3 months plus 1 additional month for each increment of $10,000 of such winnings or income (as applicable) received, not to exceed a period of 120 months (for winnings or income of $1,260,000 or more), if the amount of such winnings
or income is greater than or equal to $100,000.

So now you know. Republicans are fixated on lotteries and Medicaid because (a) poor people are getting away with something, and (b) the income reporting rule for lotteries was changed by the hated Obamacare. The CBO score is useful not because of the amount of money involved—which really is peanuts—but because it demonstrates that the rule affects the federal budget. That means it can be changed in a reconciliation bill. Which is what Republicans are trying to pass.

All clear now?