Is a Physician "Provider Tax" the Solution to Michigan's Medicaid Woes?

Abstract

Michigan is facing a Medicaid budget shortfall. Evidence suggests that the underlying factors causing reliance on Medicaid and cost of treatment to increase are getting worse. A tax on Michigan physicians has been proposed by legislators to meet the budget demands of Michigan's Medicaid program. This paper looks at the legal basis of such a tax, studies the successes and failures of other states that have implemented similar taxes, and attempts to assess the effect this tax would have on Michigan doctors and patients. With current Medicaid rules, such a tax would increase federal matching funds and potentially reimbursement rates. However, the cost of a tax on physicians would not be born equally, and there are no guarantees that the revenue would provide a funding solution.