States are drowning in red ink. Whether red or blue politically, states do not have enough greenbacks to balance their budgets. So state houses across the country are trying to find rational ways to stretch their dollars. Illinois is no exception.

In response to an increasing Medicaid burden for the state, Illinois’s legislature came to a common sensical decision: let’s be sure that everyone getting Medicaid benefits in our state is, in fact, an Illinois resident and that the level of each one’s income qualifies them for the joint federal/state program. Of course, such a mandate would stipulate that the Medicaid recipient show evidence of residency and earnings. Not too great of a burden in return for free medical care. At least, that is how the legislature sees it.

But in an ever increasing centrally controlled environment, the Center for Medicare and Medicaid Services (CMS) in Washington DC requires that states must file for permission to make any changes to the Medicaid joint effort. So Illinois submitted a waiver application to make the changes in their program. Their expectations, undoubtedly, were that such a waiver would protect both federal and state dollars from going to non-residents who were not eligible for Medicaid or to recipients who were falsifying income data to qualify. In other words, they were trying to eliminate waste and fraud.

In a telling moment for the current administration, CMS denied the state of Illinois’s request for a waiver. As the Chicago Tribune noted, CMS based its denial on the Affordable Care Act, which forbids any state from making a person’s entrance into the Medicaid program any more restrictive than it was at the moment of passage of the health reform bill. Whether Illinois’s suggested changes made it more difficult for Illinois residents that qualify for Medicaid to enter the program or not was irrelevant to CMS. The Affordable Care Act dictated the result. The Feds had spoken.

The current debt crisis has brought the federal government to a standstill. It reverberates through every state capital. The inability of a sovereign state’s legislature to make a common sense decision to the benefit of its own citizens and to all taxpayers throughout the country, without the federal government’s interference, is excessive.

But it may give us a glimpse of how we got into such an economic mess.