In 1989, the Republican Governor of New Hampshire, Judd Gregg, had a gaping budgetary hole that he did not know how to fill. His health secretary found a solution: a tax maneuver he had learned from the vine which would oblige Washington to send millions of state from Medicaid funds.
He was called a tax on the MEDICAID supplier, and the New Hampshire was among the first states to try it. The New Hampshire imposed its hospitals and returned dollars to them as higher payments for the care of Medicaid patients. On paper, the tax has inflated the expenses of state Medicaid, allowing it to receive more counterpart funds from the federal government.
“It was a way to play at the bottom of the federal government for lack of a better term,” Gregg said recently.
What started as creative budgeting in New England has, more than four decades, a snowball in a MEDICAIDI funding pillar, the insurance program for the poor which covers 72 million Americans. Each state but Alaska has at least one such a tax. In some states, supplier taxes and related payments lead to more than a third of the overall federal financing of the program.
Likewise after these taxes ended, Congress Republicans now plan to reduce or end them as a means of reaching excessive federal reductions in the expenses proposed in the budget of the Chamber. If they did, it would save the federal government About $ 600 billion During the next decade, much of the $ 880 billion in cuts that the Chamber Committee supervised Medicaid was accused of observation.
The change could strike certain states led by the hardest Republicans, a recent analysis Emissions, because their Medicaid budgets tend to be more dependent on the tax strategy of medical suppliers.
Nevertheless, the idea has gained ground among the conservative reflection groups and the republicans of the Congress, which recently described payments as gadgets,, scams And even “money laundering. “”
“It is a way that the state is essentially only to create federal money from the air,” said Brian Blase, president of the Paragon Institute and author of a recent newspaper which analyzes some of the most elaborate ways, states exploit the fault. In Arizona, legislators established a hospital tax in 2020 which enabled it to increase hospital payments by more than a billion dollarswithout spending additional state funds. Mr. Blase encourages legislators to reform the system within the framework of their budgetary bill.
In its simplest form, the tax maneuver works like this: when a Medicaid patient goes to the hospital, the federal government and the state generally share costs. The ratio varies from one state to another, according to the poor of the state, but the federal government often pays around 60% of the bill.
States that use taxes for suppliers to get more money usually start by paying hospitals more. If the federal government pays 60% and the state by 40%, when a state increases a payment to $ 1,030, against $ 1,000, the federal government exceeds $ 618 instead of $ 600.
With the tax, the State can really earn money while increasing the payment of the hospital. Even if the State reimbursed the hospital entirely for the amount of the tax, it would have even more funds, because the new federal money covers more than the difference.
Medicaid expenditure $ 870 billion Each year, states can therefore generate tens or hundreds of millions of dollars this way.
Over time, as the rules have become more complicated and the consultants have developed new strategies, the financing mechanisms have become more complex and money has become more difficult to follow. But the measures show that the total federal contribution has increased even if the official match rates have not changed.
The government does not know exactly how much money the states have increased with these taxes and related strategies. The Centers for Medicare and Medicaid Services, which pays the federal share of the program, do not follow all the income associated with the taxes on providers. The Payment and Access Commission of Medicaid and Chip does not do either, the organization created by the Congress to analyze the expenses of Medicaid.
For years, the use of service providers in New Hampshire has been openly described as “Meddam“By representatives of the state. In other states, there is fewer colored euphemisms, such as “Taxes and matching“In Maine.”Maximization of Medicaid“Was a widespread term in the early 2000s, when taxes took off.
The federal government authorizes states to have provisions of providers as long as they do not exceed a certain percentage, intended to be applied between all providers in a category – and not only as a round to a hospital which treats a high number of medicaid patients. With the government's blessing, there are now 19 different types of health care providers that can be taxed, not just hospitals but also dentists and even chiropractiansAnd many approved means to reimburse them.
“This is absolutely legal, and that's the problem,” said Rodney Whitlock, vice-president of McDermott + Consulting and a member of the long-standing Republican Senate who worked on Reining in service providers in the 2000s, with Limited success.
The proposals circulating on Capitol Hill to prohibit taxes do not include the necessary provisions to replace any dollar lost by new sources of funding, which would leave certain states by large holes in their Medicaid budgets. In some places, more than a third of Federal Medicaid expenses disappeared. To adapt to less money to come, some would probably reduce Medicaid coverage for working adults. Others would reduce payments to hospitals and nursing homes, or would examine other parts of the state budget for cuts, such as public education. Some could increase taxes.
“If you remove this money, it is a political decision,” said Robin Rudowitz, director of the Medicaid program in Kff, a health research group. “This is not a reprimand problem on fraud.”
The federal government generally devotes a larger share in poor states, which tend to be in the South, and many states that should lose the most of politics are governed by Republicans.
Because there are no precise federal estimates of the effects of the tax, a team of researchers from the Hilltop Institute of the University of Maryland-Baltimore has reconstructed data from various sources to provide Approximate calculations On how much money taxes currently generate for states.
Using conservative assumptions, the analysis revealed that the change could mean a budget hole of at least $ 2.7 billion for South Carolina next year – about a third of what the Medicaid program spent it last year. In Mississippi, where the Medicaid program is also strongly based on service providers, the state could lose around 2.1 billion dollars in federal funds, around 37% of what the state generally obtains from the federal government.
Other cuts that legislators are considering – such as reducing expenses for the expansion of Obamacare Medicaid – would reduce more disproportionately from the richer states led by Democrats. But these policies may not have the same rhetorical attraction as the slaughter of provisions of providers.
The federal government has tried on several occasions and has failed to make the taxes of providers go back, both under the Democrats and the Republicans. In 2006, federal officials tried to do so through regulations and the congress widely blocked the effort in the face of lobbying of governors and hospitals. In the 2010s, President Obama published two budgets which proposed limits to their use, but the Congress refused to continue the idea.
Hospitals continue to discourage the congress from making the cuts. “For those who specifically suggest that they are illegitimate, nothing could be further from the truth,” said Stacey Hughes, executive vice-president of the American Hospital Association. “These additional payments are rubbed and go through a significant regulatory examination.”
Government surveillance agencies have also produced detailed reports and recommendations for reform. A 2020 report Since the Government Accountability Office has estimated that the States, on average, have used taxes to bring the federal government to pay an additional 5% of their Medicaid invoices. An Inspector General's office investigation In 2018, recommended that the government “re -evaluates” its current rules. Biden administration has created a regulation prohibiting pooling agreements that move funds to ensure that all hospitals recover their tax money for the supplier. It does not start before 2028. The Trump administration is working on a regulation that could slow down certain Medicaid taxes, but the full language has not yet been made public.
“This is the whole problem with the conversation here is that we should have had it in the early 90s,” said Andy Schneider, a member of the longtime Democrating Congress who is now a research professor in public policy in Georgetown.
After his visit as a governor of New Hampshire, Mr. Gregg was elected to the Senate and continued to chair the budget committee there. When he first encountered taxes on the suppliers of Medicaid as governor, his condition was in a deep budgetary hole. When he arrived at Congress, he started to see them differently. But they had become so anchored that they were difficult to reform.
“At the time, I was happy to play the federal government because we were in crisis,” he said. “I have always assumed that it would disappear. He didn't do it. He continued, and became a fait accompli who continued again and again. ”
Additional work by Guilbert Gates And Alicia Parlapiano.
