About | HeinOnline Law Journal Library | HeinOnline Law Journal Library | HeinOnline
LOG IN
LOG IN

1 Justin Higginbottom, State Hospital and Medical Provider Taxes: Not What the Doctor Should Order 1 (2009)

handle is hein.taxfoundation/ffcadxz0001 and id is 1 raw text is: State Hospital and Medical Provider Taxes.: Not What the Doctor Should Order Tax Foundation Fiscal Fact No. 203 by Justin Higginbottom December 9, 2009 Summary Taxing health care to pay for health care seems counterintuitive, but it is increasingly popular with state governments. Budgets are strained and Medicaid demand is up. In response, states are raising many taxes, and health care providers are an increasingly popular target because the revenue raised from those taxes can be used to obtain a larger amount of federal matching funds. States shift Medicaid revenues to their general funds while shifting Medicaid costs to the federal government. Twenty-two states have significant health provider or hospital taxes, and six of those have been enacted or expanded within the last year. Four enactments or expansions are pending. Background and Analysis Medicaid is financed at both the federal and state levels. When states raise money they plan to spend on Medicaid, they receive matching funds from the federal government depending on the state's level of poverty and unemployment. For example, during Federal Fiscal Year 2009, Mississippi had the highest federal matching fund rate (Federal Medical Assistance Percentages, FMAP) and received $5.10 for each dollar the state spent on Medicaid. For each dollar Wyoming spent on Medicaid, the feds kicked in $1.28-the lowest rate in the country. The American Recovery and Reinvestment Act of 2009 provides increased matching rates for Medicaid during the period October 1, 2008 through December 31, 2010, totaling an additional $87 billion in federal funding. (Table 1 shows data on state health provider taxes and the federal matching that can result.) A tactic used by some states for bridging their budgetary gaps is to tax health care providers, use the collected revenue to qualify for additional matching funds from the federal government, and then use those federal dollars to compensate Medicaid providers. Medicaid is an entitlement program, and so long as states meet eligibility criteria, federal matching is open-ended. As states get more federal funds for Medicaid, the federal government must tax or borrow to pay for this spending increase. In 2009, Wisconsin Governor Jim Doyle signed into law a state budget including a 20% increase in the health provider tax enacted just three months earlier. The increase would result in federal Medicaid matching funds increasing from $635 million to $796 million. It is estimated that $292 million of that amount will be used for non-Medicaid purposes.Lj In 2004, the U.S. government's General Accounting Office (now the Government Accountability Office) reported that intergovernmental transfers-transfers of funds from one government agency to another-have enabled states to funnel Medicaid matching funds into state general coffers.j3J Table 2 shows recent estimates for the returns on hospital taxes.

What Is HeinOnline?

HeinOnline is a subscription-based resource containing thousands of academic and legal journals from inception; complete coverage of government documents such as U.S. Statutes at Large, U.S. Code, Federal Register, Code of Federal Regulations, U.S. Reports, and much more. Documents are image-based, fully searchable PDFs with the authority of print combined with the accessibility of a user-friendly and powerful database. For more information, request a quote or trial for your organization below.



Contact us for annual subscription options:

Contact Us

Already a HeinOnline Subscriber?

Log In

profiles profiles most