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.”