The House-passed tax and spending bill includes a provision that would cap or freeze provider taxes used by 49 states to boost Medicaid funding. This strategy allows states to collect taxes from hospitals and use the revenue to draw additional federal matching funds.
Critics, including CMS Administrator Mehmet Oz, say the tactic is an accounting trick that “robs federal taxpayers.” Supporters, like America’s Essential Hospitals, say the taxes help sustain vital healthcare services in low-income communities.
States could face deep budget shortfalls if the federal government limits this funding mechanism, forcing them to raise taxes, cut benefits, or reduce Medicaid rolls. Medicaid provides care to over 80 million low-income Americans.
The GOP bill would also add work requirements and aims to cut federal Medicaid spending by $625 billion over 10 years. While some conservatives call provider taxes “corporate welfare,” hospital advocates warn it could lead to facility closures and fewer services.
Health policy experts warn the bill could have lasting consequences on care access if enacted.
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