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Arizona Medicaid expansion to get boost from hospital taxes

NEWS IN BRIEF — Posted Feb. 4, 2013

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Hospital taxes or fees will be used to support the Medicaid expansion in Arizona. In her State of the State address, Republican Gov. Jan Brewer expressed concern that an expansion could produce additional financial burdens the state won’t be able to afford on its own. States that expand Medicaid starting in 2014 get full federal assistance for added costs in the first three years, but the federal share eventually drops to 90% in most states.

Revenues generated from a hospital assessment or provider tax would ensure that the state would bear no added costs from expanding the program, Brewer said. Provider taxes typically work by assessing fees to health care professionals up-front to secure higher federal matching dollars, which then are used to reimburse those same doctors and hospitals as well as pay for other Medicaid costs.

Many Arizona hospitals hoping to see lower uncompensated care cases as a result of the expanded Medicaid eligibility are backing the governor’s expansion plans and the tax. Expanding the state’s Medicaid program “will boost the economy, save state money, lower health care costs for employers and — most importantly — improve the quality of life for everyone,” said Judy Rich, president and CEO of Tucson Medical Center, speaking on behalf of the Arizona Hospital and Healthcare Assn.

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