Medicaid tax falls $130 million short of projections, State may lose federal matching funds

Sep 17, 2012

A new state tax to help pay for Medicaid is coming up $130 million short of projections.

The one-percent tax on health insurance claims was supposed to bring in $300 million this fiscal year. Now, budget officials say it’ll only generate about half that. Budget department spokesman Kurt Weiss said the state should be able to scrape together enough money to make up for the missing tax revenue. It is federal matching funds he is worried about.

“If you look at the way the match works, there’s the potential of losing up to $260 million in matching federal funds with this if we’re $130 million short. So, certainly that is part of the concern,” Weiss said.

Weiss said bad projections could be to blame for the gap, or health care providers simply might not be paying their share. He said his department is working with other state agencies to pin down the problem.

“It is a new tax, and it is something new to those that are paying it. So we’re really trying to reach out, do that education, and trying to make sure we’re getting the money from everybody we should be getting the money from,” he said.

Weiss said officials are looking for ways to try and make up the state’s shortfall. If shortfalls continue, he says lawmakers may have to make changes to the tax.