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Fact Check: Could Colorado Lose Billions of Dollars in Federal Healthcare Funding Under HB-1168?

April 24, 2019 / The Colorado Sun

CLAIM: The proposed hospital tax in HB-1168 “would almost certainly push the total taxes and fees specifically on hospitals in Colorado above 6% of their net patient revenues. Federal law forbids states from going above that threshold.”

FACT: State and federal governments share the cost of Medicaid. In the case of the recent expansion of Medicaid coverage in Colorado, for example, every $1 spent by Colorado receives a federal match of more than $9.

But to qualify for federal matching funds, states must meet certain conditions – and the amount of taxes collected from hospital services is one of those conditions.

According to the National Conference of State Legislatures:

“Under federal law and regulations, a state’s ability to use provider-specific taxes to fund their state share of Medicaid expenditures has limits. … This maximum federally allowable amount increased back to 6 percent of net patient revenues as of October 2011…”

And according to the Congressional Budget Office:

“Any tax amounts collected from providers that exceed 6 percent of their revenues are  deducted from a state’s total Medicaid expenditures before determining the amount of federal matching funds.”