Jonathan Palisoc, health economist and Medicaid expert, on provider taxes and state directed payments

The One Big Beautiful Bill Act’s work requirements are getting most of the attention, but health economist and Medicaid Expert Jonathan Palisoc sees a much larger impact to provider bottom lines coming from the changes to the provider tax and state directed payment programs.

For example, this past quarter, publicly traded hospital operator UHS said they’re pacing for $1.3 billion in supplemental payments from state programs for Medicaid this year. This will be reduced by approximately $420-470m by 2032 when OB3's new rules are fully implemented. 

Jonathan explains how the programs work today, how they’re changing, and what it means for the interconnected web of health care finances.

00:00 Introductions and context

01:00 The lemonade stand analogy

03:13 The history and growth of provider taxes

07:49 The rules and states' creative compliance with them

12:02 Changes from OB3

14:30 How states will respond

15:57 Impacts on hospital finances

21:13 The effect on beneficiaries

23:37 Investments and staffing shifts for the provider system

24:40 Accounting treatment of the state directed payments

26:54 Signing off and where to find Jonathan on the internet