FROM BEHIND THE WSJ PAYWALL
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Why Tax Hospitals?
It’s a Medicaid Shell GameProviders pay the state. The state pays providers, then collects matching funds from Uncle Sam.
By Red JahnckeDec. 29, 2017 5:22 p.m. ET
When Connecticut faced a budget shortfall of $2.2 billion, or 11%, this year, it helped close the gap by almost doubling its tax on hospitals, to $900 million. Taxing hospitals sounds strange, especially since most are nonprofits. It also would seem to increase their costs and, thus, the cost of care—much of which, thanks to Medicaid, is borne by the state that levies the tax.
Yet 42 states tax hospitals. Why? One answer is the perverse incentives built into the Medicaid law. When a state returns tax money to hospitals through Medicaid “supplemental payments,” it qualifies for matching funds from Washington.
Connecticut hospitals will pay $900 million in taxes, but the state will offset that with $600 million in supplemental Medicaid payments—matched with $450 million of federal funds. The state keeps those matching funds, plus the $300 million from the hospital tax, meaning Hartford comes out ahead in the whole scheme by $750 million. Nice work if you can get it.
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Oh come on. Hope DJT45 shuts this stupidity down immediately.
When you consider all the costs of “handling” this money from one Gooferment pocket to another, the Taxpayers are really getting screwed.
By “handling” I mean, the “loss” at each level of Gooferment that passes Taxpayer money to another level of Gooferment. I’ve seen calculations that estimate it at 50%. So a CT Taxpayer sends the “Federal” Gooferment a dollar, from which then the “Federal” Gooferment send the “Connecticut” Gooferment fifty cents. The CT Taxpayer would be better off just allowing the “Connecticut” Gooferment to steal the fifty cents directly. Argh!
Why can’t “We, The Sheeple” see that?
So if the “Connecticut” Gooferment steals 450M$ from the “Federal” Gooferment, then the “Federal” Gooferment has to steal 900M$ from everyone paying taxes. Mutliply that by 50 States and who knows what else and that’s a lot of <synonym for the act of procreation in real time> money.
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