On March 26, KFF released research demonstrating the state-by-state use of provider taxes. Though publicly available data is scant on Medicaid Provider Taxes, the health policy research organization released analysis based on their survey of state Medicaid Directors indicating that all states but Alaska, the Dakotas, South Carolina, and Virginia use nursing home provider taxes to generate revenues and fund their Medicaid programs.
As Congress considers ways to reduce federal spending, Medicaid is a primary target. Political talking points accuse the very large Medicaid budget line item as rife with inefficiencies and downright illegalities despite bodies of research to the contrary. Of particular ire to some are provider taxes because of the manner in which they legally generate state funding and allow federal matching dollars to augment state Medicaid expenditures.
The rules governing provider taxes are complex and include limitations on states’ collection above a threshold of 6% of net patient revenues unless certain statistical tests are met. Federal proposals to offset the cost of tax cuts and increased border control funding include reducing the 6% threshold. It is unknown to what threshold that reduction would be, though the KFF analysis demonstrates that 28 states have nursing home provider taxes above 5% of net patient revenues, therefore generating significant funding for the state. Should the federal threshold be reduced below 5%, all 28 states would see Medicaid budget holes.
Read the full brief here. LeadingAge continues to advocate and educate members of congress on the critical role of all Medicaid preservation; talking points available here and here, or take action and write your member of congress here.
Follow the latest on Medicaid issues related to Budget Reconciliation 2025 via this serial post.
