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Committee examines provider taxes, hospital reimbursements and potential budget consequences
Summary
Committee members pressed Medicaid and fiscal staff on how provider taxes are collected and used, how provider taxes "gross up" federal match, and the fiscal implications of reducing or eliminating taxes paid by hospitals and other providers.
Committee members spent a significant portion of the Jan. 15 House Health Care briefing asking how provider taxes operate and what budgetary effects would follow if those taxes were reduced or eliminated.
Nolan Langewell and Ashley Berliner explained that provider taxes are general fund revenue sources that the state uses, in part, to draw additional federal Medicaid dollars. Langewell described a simplified illustration: removing $100 million in provider tax revenue would create a general-fund shortfall and, taking the federal match into account, could translate to a much larger reduction in Medicaid purchasing power. "If we were to eliminate a $100,000,000 in provider tax, we would have…
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