Americans for Tax Reform president Grover Norquist sent the following letter to Louisiana legislators this morning in opposition to legislation that would raise health care provider taxes in order to game the federal Medicaid matching fund system:
Dear Chairman Abramson,
On behalf of Americans for Tax Reform (ATR) and our members across Louisiana, I write today in strong opposition to HB 532, legislation being considered by the committee today that would, if passed, impose a new levy on health care providers for the purpose of gaming the federal Medicaid matching fund system in order to draw down more debt-financed federal dollars.
Lawmakers across the country from both parties, especially during the tight budget years amid and following the recession, have gamed the federal matching fund system to finance other spending priorities or to avoid necessary reforms. HB 532 would continue this budgetary charade, which only serves to increase the rate at which Medicaid goes bust.
Proponents of HB 532 claim it does not raise taxes. It’s just a little game where the state takes a dollar from hospitals, activates a drawdown of a couple federal dollars, gives the dollar back to the hospitals and keeps the remainder for the state, and this game is played a couple hundred million times over. Supporters of HB 532 argue that hospitals are made whole at the end of the day and that this magical free federal money just appears out of nowhere.
There are a couple of problems with this portrayal of HB 532. First, the money drawn down from the feds does not come out of thin air. It comes from the federal income taxes of your constituents. Second, if that weren’t bad enough, HB 532 is ultimately an effort to bleed even more money out of a federal government that is over $16 trillion in debt. How’s that for fiscal responsibility and conservatism? Again, the fiscal chicanery that HB 532 promotes only increases the rate at which Medicaid becomes insolvent and is indefensible.
Rather than push forward with misguided bills like HB 532, which increases state levies on health care providers in order to make the state more dependent on debt-financed federal dollars, ATR encourages legislators in Baton Rouge to lobby Louisiana’s congressional delegation and President Obama for more control of the Medicaid dollars they already take in. As opposed to getting distracted with ill-advised proposals such as HB 532, lawmakers would be wise to instead focus on legislation that would help ensure the state doesn’t fall behind and find itself at a competitive economic disadvantage relative to other states. Such legislation can be found in the ten bills that phase out the state personal and corporate income taxes.
Your counterparts in other state capitals are moving to reduce income taxes on individuals, families, and employers this year. Your neighbors in Texas already enjoy the advantage of having no personal or corporate income taxes; now legislators in Austin are looking to increase their state’s competitive advantage by phasing out the margin tax on businesses this session. Louisiana legislators can ensure their Pelican State remains economically competitive by rejecting the fiscal malfeasance found in bills such as HB 532, and instead focusing on pro-growth reforms that would actually make Louisiana more economically competitive. I urge you to vote “NO” on HB 532. ATR will continue to monitor this issue closely and will educate your constituents as to how their representatives in the legislature vote on this important matter.
To view a PDF copy of the letter, click here.