Roll Call: Latest News on Capitol Hill, Congress, Politics and Elections
October 2, 2014

Taxes on Health Care Providers Are Bigger Chunk of Medicaid Funding

A Government Accountability Office report released on Tuesday examines states’ increasing reliance on taxes on health care providers to help cover Medicaid spending.

The Medicaid program, which provides insurance coverage for low-income persons, is the largest federal health program by enrollment. The states largely administer the Medicaid program, and the federal government matches state Medicaid funding through a complicated formula. States finance their Medicaid spending share largely through state general funds.

But the GAO report points out how that is changing:

GAO found, based on a questionnaire sent to state Medicaid agencies, that states financed 26 percent, or over $46 billion, of the nonfederal share of Medicaid expenditures with funds from health care providers and local governments in state fiscal year 2012. State funds were most of the remaining
nonfederal share.

CQ HealthBeat’s Kerry Young reported Tuesday on a House hearing on the GAO report and increasing additional state supplemental funding to health care providers to fill the gap between what Medicare pays for a service and the reimbursement from Medicaid.

Both the Centers for Medicare and Medicaid Service officials and lawmakers expressed concern that the complex state Medicaid funding mechanisms shift costs to the federal share of Medicaid funding. Republicans on the committee urged switching federal Medicaid funding into a block grant program, allowing the states to focus on managing the Medicaid program instead the federal Medicaid funding formula.

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