Federal HR1 would phase down provider taxes, costing Vermont an estimated $113 million by 2033, officials say

Nolan Langall of the Joint Fiscal Office said federal changes in HR1 that freeze and phase down provider-tax authority will materially reduce Vermont's Medicaid funding if left unaddressed. Langall told the briefing that Vermont currently raises about $212 million from provider taxes in fiscal year 2025, with hospitals accounting for roughly 93% of that total, and that his preliminary estimate projects about $113 million less in provider-tax revenue by 2033.

Langall placed the impact in budget context: the state's FY25 total appropriation was about $9.2 billion, of which roughly $2.4 billion was Medicaid. He explained that at Vermont's FMAP (federal medical assistance percentage) the federal share of most Medicaid costs is about 62 percent, meaning state dollars are leveraged by federal matching. "When we cut Medicaid, we cut a dollar out of Medicaid, we…