Medicaid Provider Taxes Protect Californians’ Access to Care
Medicaid provider taxes are a cornerstone of the Medicaid financing structure.
Without federal revenue generated from these taxes, reimbursement for care provided to patients covered by Medicaid would be woefully insufficient and health care access would be at grave risk. For many hospitals, losing this revenue would mean closure of service lines; for others, it would threaten their viability altogether.
Cutting Medicaid means millions of Americans — regardless of what type of insurance they have — would lose access to their health care providers.
Medicaid and California’s hospital tax
- In California, Medicaid pays 80 cents for each dollar spent on care; without the additional payments from the hospital tax, reimbursement would drop to just 70 cents on the dollar.
- The federal Medicaid statute expressly authorizes provider taxes as permissible sources of funding the nonfederal share of program expenditures, in recognition of finite state revenue
sources.
- State Medicaid agencies work closely with CMS to ensure provider taxes comply with all federal requirements and CMS must approve every program year after year. California’s hospital tax program has been approved for more than 10 years.
- Forty-five states rely on a form of a hospital tax. California’s hospital tax program is broadly similar to states such as Indiana, Tennessee, West Virginia, Georgia, and Nebraska.
- Approximately one-third of Californians are covered by Medicaid — nearly 15 million people. Without
the hospital field’s ability to self-finance additional payments via the hospital tax, some 150 hospitals in California would lose money — greatly increasing the risk of service line and facility closures.
- Hospitals pay provider taxes to the state before receiving any federal funds to care for patients. This is increasingly difficult to do with more than half of hospitals in California currently losing money.
CHA Document Details Considerations for Freestanding ED Model
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State Files Revised Hospital Fee Program Application
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Registration Deadline Approaching for Cal HQ’s Hospital Quality Kickoff Event
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Future of Medi-Cal Commission Advisory Group Discusses Draft Priorities
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AHA Seeking Applications for Community Health Award
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With Signature Gathering in Full Swing, Hospitals Encouraged to Support CHA’s Measure, Oppose Union Efforts
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Leading with Honesty and Purpose on Affordability
Earlier this week, members of Congress pressed some of the nation’s top health care leaders, including Rick Pollack, President & CEO of the American Hospital Association and David Aizuss, MD, Chair of the Board of Trustees for the American Medical Association, about the role of health care providers in controlling health care costs.
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