Sunday, March 1, 2009

Voodoo Finance

Governor Strickland of Ohio is going to increase his Medicaid available funds by -- taxing health care providers, specifically hospitals, nursing homes, MR facilities and managed care companies.


Dirty little secret -- some states use "bed taxes" or "provider taxes" or "provider fees" to generate match money for federal Medicaid funds, a maneuver which is legal but on shaky ethical grounds. This is "dog chases tail" gimmick financing. Who is to blame? Fed reform of Medicaid would help.

A nursing home will pay the "tax" on all licensed days of service, but will be reimbursed for the "tax" only for those days used by Medicaid recipients. This amounts to a tax on all residents not funded by Medicaid, what the federal government calls cost shifting.

When criticized for using stunts and gimmicks to balance the budget (and avoid restructuring the government), Strickland uses the everybody else has done it defense.

To be fair, the states have many difficult budget decisions. This is not a healthy balance budgeting tool, especially after the feds pouring stimulus money into the states.

For more details, excellent reporting in the Columbus Dispatch.

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