Jonathan Williams and Brooklyn Roberts: Medicaid Expansion and the Provider Taxes Con Game
In their recent op-ed in Washington Examiner, ALEC Executive Vice President of Policy and Chief Economist Jonathan Williams and Health and Human Services Task Force Director Brooklyn Roberts explain that many states that expanded Medicaid under the Affordable Care Act have financed it through healthcare provider taxes.
These are taxes on hospitals and sometimes HMOs or health insurance providers. You would think that taxing hospitals would be counterintuitive if you’re trying to make healthcare more accessible because it drives up the cost of care.
Instead, it’s a clever scheme from which the state and hospitals benefit — at least in the short term. It goes something like this: The state taxes hospitals for revenue. The state then gives a large portion of that money back to the hospitals in the form of supplemental Medicaid payments. The federal government matches such payments at a rate that varies by state, and so the state’s trade of money back-and-forth with its own hospitals increases the federal contribution to the state.