DALLAS – The Tucson, Ariz. city council will consider a temporary, self-assessed tax that would help local hospitals qualify for additional federal funding.
The two-for-one match could generate up to $70 million of federal Medicaid funds to cover the hospitals’ indigent care costs until provisions of the Affordable Care Act go into effect Jan. 1, 2014. The tax would expire at the end of 2013.
The $35 million expected to be generated would serve as the non-federal share of payments under the Arizona Health Care Cost Containment System.
Operators of eight Tucson hospitals asked the city to impose the tax under a 2011 state law that allows cities, counties, and tribes to levy a tax with revenues dedicated as a match for federal healthcare funds.
The funding will go to acute care hospitals in Tucson that provide significant amounts of uncompensated care to uninsured and low income residents.
The assessment will be based on each facility’s gross patient revenues. The tax is structured to prevent costs being shifted to patients, insurers, or the city.
The structure of Tucson’s proposed hospital tax is based on a similar tax already adopted by Phoenix.
A petition drive is under way in Arizona to force a referendum next year on the expansion of Medicaid in Arizona adopted by the Legislature this year at the urging of Gov. Jan Brewer.
Opponents of the extension must submit 86,405 valid signatures by Sept. 12 to put the Medicaid repeal on the November 2014 ballot.
The new law extends Medicare eligibility on Jan. 1 to Arizonans earning 133% of the federal poverty level, or $23,550 for a family of four. Officials expect 300,000 new applicants under the revised standard.
A state tax on hospitals will generate $240 million a year to leverage an additional $1.6 billion in federal Medicaid funds.