California Dreaming: The MCO Tax

March 20, 2024

Good morning,

Here’s a follow-up to last week’s commentary by former NYS DOB Director Paul Francis (who wore many leadership hats during his time in state service) regarding the now infamous MCO Tax we began telling you about a few weeks ago. 

It’s important to note that right now lawmakers are making budget plans based on a new ‘provider tax’  (in this case the provider is the MCO) that has not yet been applied for or approved by CMS.  Like magic, significant executive budget reductions proposed by the Governor in January are being wiped away with  funds that would result from the Tax, to be replaced by Medicaid increases in numerous sectors. But all of it is predicated on CMS approval and there is no doubt that the final enacted budget will make much of it contingent upon federal approval.  So what’s Plan B?  

It’s an election year for all 212 legislators. Restoring cuts and spending more feels good. But as Francis writes below “…the federal government recognizes the potential for Medicaid taxes like the MCO tax to become a federal printing press for states and so over the years has developed a complicated set of rules to prevent that. The thrust of the rules governing these taxes is to ensure that the primary purpose of the tax is not to solely generate additional federal revenue…”  Considering that states across the country are having the same thought as New York about an MCO Tax one has to wonder if the dominoes will fall and if so, when?

 

Paul’s Commentary #9: California Dreaming and the MCO Tax

Week of March 18, 2024

STEP TWO POLICY PROJECT

MAR 19