Here’s how this particular scam works.
States tax health care providers and use those funds to help cover their Medicaid costs.
States tax health care providers and use those funds to help cover their Medicaid costs.
Then, the states turn around and increase what they pay these same providers for Medicaid benefits – effectively covering the cost of the tax.
Then, because of the way Medicaid is financed, the states can bill the federal government for half of the spending increase.
Let’s say, for example, a state imposes a provider tax on hospitals that raises $100 million. And then it returns that $100 million to the hospitals in the form of higher Medicaid reimbursement rates. There’s been no increase in benefits. Providers aren’t better off. But the state gets an extra $50 million from the federal government’s matching fund, money that it can use for anything it wants. (The fed pays states up to 90% to cover the cost of expanding Medicaid under Obamacare.)An Oregon state representative once called it a “dream tax.”
- States can use Medicaid to steal money from the federal treasury...
- The Congressional Budget Office figures that the 10-year cost of this tax scam is more than $600 billion, which is almost exactly what Republicans are eyeing in savings from Medicaid.
- Provider taxes are now the second largest source of funds for Medicaid.
