In the early 1990s, some states across the country began to take taxes from health care providers, which included in home care. It was done quietly and slowly at first. The common thinking among politicians seems to be that when you take small amounts or taxes, or only subtly increase taxes here and there, the taxpayer really doesn’t notice and isn’t going to gripe too much about it, but when you take a lot it begins to get painful.
For the in home care industry and other health care providers, those small taxes have become painful, to the point where home care businesses and other health care providers in Vermont are making a lot of noise.
These taxes are commonly referred to as provider taxes and they are sent to the state, which in turn uses those tax dollars to draw down and bring in more federal dollars through the Medicaid program. Some have called this system a scam, though numerous efforts to by the federal government to deem this practice unconstitutional have been unsuccessful.
According to News & Citizen, published through Stowe Today, in the blog, Payment system hurts home health care; fix is needed, written by Rep. David Yacovone:
“Not only has the breadth of the tax grown to cover more providers, but the actual tax rate has skyrocketed. Nursing homes, for example, started with a $50-per-bed tax. Today the tax is more than $4,900 per bed annually. Vermont, like many other states, has drunk heavily from the provider tax Kool-Aid pitcher and now is very dependent on this funding source to operate our health care programs. In fact, Vermont raises $164 million annually from provider taxes, which is more than half of the Vermont State Health Care Resources Fund.”
A major problem with this provider tax system is that it continues to hammer the in home care industry. As the Medicaid reimbursement rates continue to be cut, with more cuts expected in the coming years, there is a growing gap between reality and services. The system pays for more services but it doesn’t increase the payment rates to providers, even though the taxes have continually increased.
As the home care industry is so vital to the overall health care industry, it’s essential, according to Representative Yacovone, to address the issue of the provider tax. However, with such an imbedded system and a state now heavily dependent on these taxes, changes may be slow and as more seniors depend on in home care support, a critical tipping point may be fast approaching.