Health Care-Related Taxes in Medicaid

Under the Medicaid statute, states may generate their share of Medicaid expenditures through multiple sources, including health care-related taxes, sometimes referred to as provider taxes, fees, or assessments. Health care-related taxes have become a more common funding source for state Medicaid programs over the past 15 years, with 49 states and the District of Columbia imposing at least one health care-related tax in state fiscal year (SFY) 2019, up from 35 states in SFY 2004. This issue brief describes the current use of health care-related taxes in Medicaid, the history and current state of the rules governing their use, and the potential effects of changes to these policies.