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State Could Lose $260 Million in Medicaid Funds with Tax Shortfall

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State funding for Medicaid could take a big hit this year. As Michigan Radio’s Jake Neher explains, a new tax meant to help pay for the program is coming up very short.

State lawmakers created a one-percent tax on health insurance claims to help pay for Medicaid. It was supposed to bring in $300-million this fiscal year. Now, budget officials say it’ll only generate a little more than half that.

Kurt Weiss is a budget department spokesman. He says the state has other ways to come up with some of the money.

“We’ve been trending up a little bit above projection in some of our other tax areas," he explains. "So, from that standpoint, we should be able to solve it.”

But the state could still lose up to $260-million in federal matching funds, even if officials find a patch. Weiss says bad projections could be to blame for the shortfall. He says it’s also likely many health care providers simply aren’t paying up. Either way, if the tax continues to fall short, lawmakers may have to make changes

Jake Neher is a reporter for the Michigan Public Radio Network. He covers the State Legislature and other political events in Lansing.
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