Hospitals Beg Iowa To Tax Them in Medicaid Scam


In Iowa, a new scheme is underway to soak the feds for more Medicaid money. Here’s how the trick works: Hospitals asked to be taxed by the state. (Right now, most states hospitals are nonprofits and therefore exempt from most taxation.) This generates $40 million in “provider assessment” fees. The state plows the money back into Medicaid, triggering federal matching spending on that cash. (The feds pay about two-thirds of Medicaid.) That money goes right back to the hospitals in exchange for services provided to Medicaid patients. It’s a kind of Do-It-Yourself multiplier effect!

The Iowa Hospital Association, which backs the idea, says the state also would benefit from the arrangement. The association estimates that after the hospitals reap their reward, the state could wind up with about $65 million.

Everybody wins. Except, well, everybody—since this whole runaround is just a way of reshuffling the money of federal taxpayers and dealing it out to hospitals and state governments.

Editor’s Note: Source –, written by Kathern Mangu-Ward, January 8, 2010

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