States Turning More to Providers to Fund Medicaid

States are relying more on provider taxes and other sources to raise their share of Medicaid funding, a new study by the U.S. Government Accountability Office (GAO) has found.

According to the GAO, state use of such funding rose 21 percent from 2008 to 2012.  Most of the money came from health care provider taxes, provider donations, intergovernmental transfers, and Medicaid certified public expenditures.

While the study examined the issue nation-wide it focused on Medicaid financing in three states:  California, Illinois, and New York.

Use of provider taxes is of special interest to Pennsylvania safety-net hospitals because it appears the state’s proposed FY 2016 budget may call for funding more of the state’s Medicaid program with proceeds from hospital provider taxes.

To learn more about how states are financing their share of their Medicaid programs and why this is of interest to policy-makers, see the recently re-released GAO report States’ Increased Reliance on Funds from Health Care Providers and Local Governments Warrants Improved CMS Data Collection and a newly published companion to the report titled Questionnaire Data on States’ Methods for Financing Medicaid Payments from 2008 through 2012.


Filed in Pennsylvania safety-net hospitals, Proposed FY 2016 Pennsylvania state budget.

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