Republican efforts to restrict taxes on hospitals, health plans, and other providers that states use to help fund their Medicaid programs could strip them of tens of billions of dollars. The move could shrink access to health care for some of the nation’s poorest and most vulnerable people, warn analysts, patient advocates, and Democratic political leaders.
No state has more to lose than California, whose Medicaid program, called Medi-Cal, covers nearly 15 million residents with low incomes and disabilities. That’s twice as many as New York and three times as many as Texas.
A proposed rule by the Centers for Medicare & Medicaid Services, echoed in the Republican House reconciliation bill as well as a more drastic Senate bill, would significantly curtail the federal dollars many states draw in matching funds from what are known as provider taxes. Although it’s unclear how much states could lose, the revenue up for grabs is big. For instance, California has netted an estimated $8.8 billion this fiscal year from its tax on managed care plans and took in about $5.9 billion last year from hospitals.
California Democrats are already facing a $12 billion deficit, and they have drawn political fire for scaling back some key health care policies, including full Medi-Cal coverage for immigrants without permanent legal status. And a loss of provider tax revenue could add billions to the current deficit, forcing state lawmakers to make even more unpopular cuts to Medi-Cal benefits.
“If Republicans move this extreme MAGA proposal forward, millions will lose coverage, hospitals will close, and safety nets could collapse under the weight,” Gov. Gavin Newsom, a Democrat, said in a statement, referring to President Donald Trump’s “Make America Great Again” movement.
The proposals are also a threat to Proposition 35, a ballot initiative California voters approved last November to make permanent the tax on managed ca …