Legal, Wrong . . . . or Morally Required?                            June 2002

Articles have appeared daily in the Richmond, Virginia, press framing an ethics debate--whether to use a “loophole” in federal Medicaid regulations to collect $259 million from the federal government. Through several transactions, the state of Virginia could receive matching funds for money it never actually spends. Both participating localities and the state would net large sums that could be used for health care or for any other public purpose since the money would go into the general fund.

The state official leading the effort to secure this funding has argued adamantly that it is morally required that the state seek and accept the money since not doing so would penalize fiscally stressed health programs and needy Virginia citizens. Many localities and associated nursing homes  have refused to participate and are zealous in asserting that it would be morally wrong to accept the money since it would be acquired through gimmickry and subterfuge--even though legal gimmickry and subterfuge! An intermediate position is that it would be OK to accept the money if it is used only for Medicaid-related purposes.

What is the ethically correct position? Do legality and need trump honesty and forthrightness? Is this really an ethical problem? Or is it a public relations problem created when the press made it visible to the public?

--submitted by Ralph Hambrick, Virginia Commonwealth University (rhambric@vcu.edu)