States can no longer use a tax loophole to fund Medicaid programs

The US government is closing a loophole in how states can tax healthcare providers to fund Medicaid. This means states will have to change how they structure these taxes to get federal approval.

States have been using a loophole to tax specific healthcare providers, often those working with Medicaid, at higher rates. This allowed them to fund their Medicaid programs without broadly distributing the tax burden across the healthcare industry. Now, states will need to find other ways to raise that money or design their taxes to be truly fair across all providers.