With Medicaid provider taxes on the road to oblivion as a result of passage of last year’s H.R. 1, often referred to as “The One Big Beautiful Act Law,” a number of states are looking to Medicaid managed care plan taxes to replace at least some of the tax revenue they will lose from the demise of Medicaid provider taxes.

Iowa has already adopted such a tax, more than tripling its Medicaid managed care plan tax in the middle of its fiscal year.  The state even increased taxes on managed care plans that do not serve Medicaid patients.

Elsewhere, lawmakers in Colorado, New Jersey, and Minnesota are considering similar actions.

In all, 22 states already tax Medicaid managed care plans while 49 of the 50 states – Alaska is the exception – tax providers.

Replacing lost provider tax revenue will be crucial for community safety-net hospitals, which care for more Medicaid patients than other hospitals and therefore face greater financial risk if states conclude that they need to offset lost Medicaid revenue with Medicaid payment or benefit cuts.

Learn more about the steps states are considering to replace the Medicaid provider tax revenue they will eventually lose from the Modern Healthcare article “States gamble on insurer taxes as provider tax ban nears” (subscription required).