“Why Tax Hospitals? It’s a Medicaid Shell Game,” by Red Jahncke, Wall Street Journal

“Taxing hospitals sounds strange, especially since most are nonprofits. It also would seem to increase their costs and, thus, the cost of care—much of which, thanks to Medicaid, is borne by the state that levies the tax. Yet 42 states tax hospitals. Why? One answer is the perverse incentives built into the Medicaid law. When a state returns tax money to hospitals through Medicaid ‘supplemental payments,’ it qualifies for matching funds from Washington. . . . No wonder taxes on medical providers have both risen and widened as the Medicaid program has grown costlier. The hospital tax is the biggest revenue-raiser, but 44 states also tax nursing homes, and 34 tax at least one other type of health-care provider. The GAO study found that these taxes had almost doubled nationally, from about $9.5 billion in 2008 to $18.5 billion in 2012, as new states like Connecticut jumped into the game, while others, such as Missouri, played more intensely.”

LTC Comment (from Stephen A. Moses, President, Center for Long-Term Care Reform):

I’ve called these “provider taxes,” used by states to leverage up federal matching payments artificially, “Medicaid planning writ large.” If and when the federal government wises up and curtails the practice, state Medicaid programs and health care providers will have to turn to state and local taxpayers to make up the difference.

Why Tax Hospitals? It’s a Medicaid Shell Game

#hospitals
#tax
#goldencareagent