1 big thing: Medicaid provider taxes throw off sparks

Axios

16-05-2025

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Congress and the Trump administration are trying to limit how much states can tax hospitals, nursing homes and other providers to help cover the cost of their Medicaid programs.
That could tie governors' and legislatures' hands at a critical moment.
Why it matters: The taxes have been a friction point for decades, but they're deeply ingrained in the safety net program. Every state except Alaska levies at least one type of provider tax to help cover the non-federal part of Medicaid spending.
How it works: States typically cover about 30% of Medicaid costs annually and use general funds along with taxes on hospitals, nursing homes and even managed care organizations. The more they collect, the more they receive in federal matching funds.
That's key in the current debate over federal Medicaid spending, with projections showing that limiting provider taxes could reduce federal outlays by hundreds of billions over a decade.
The stakes are particularly high for red states. Mississippi, South Carolina, Utah and Alabama would all lose more than one-third of their federal Medicaid funding without the ability to levy provider taxes.
State of play: The House Energy and Commerce Committee on Wednesday advanced a sweeping overhaul of Medicaid that would prevent states from establishing new provider taxes and freeze those taxes already on the books at their current rates.
Democrats unsuccessfully fought the move during a marathon 26-hour markup. But the committee ultimately advanced the restrictions and the rest of the legislation along party lines.
The Congressional Budget Office estimated the restrictions would save about $87 billion through 2034.
Meanwhile, the Trump administration this week proposed additional restrictions on how states can structure their provider taxes. Seven states currently have waivers for provider taxes that would have to be restructured under the new policy, mostly for taxes on insurers.
That proposal alone, which mirrors another provision in the House reconciliation bill, would reduce federal Medicaid spending by $33 billion over five years, CMS estimates.
"Every state is going to have a really different situation in front of them," said Morgan Craven, a director in ATI Advisory's state program and policy practice.
"Because it's been such a part of the fabric of how so many states finance and deliver care, undoing that is going to be really complex, and states will need time and will need a really strategic lens for how they can sustainably undo these policies," she added.
Zoom out: Hospitals and patient advocates are concerned about the effects of such a foundational change in Medicaid financing.
"By freezing the taxes, the proposal ignores circumstances that drive increased health care costs including inflation, increased labor and drug costs, increased utilization and increased population demand for service," the American Hospital Association wrote in a statement to the Energy and Commerce Committee this week.
Yes, but: Hospital stocks actually gained, on the premise that the House's Medicaid changes could have been more onerous, per the Wall Street Journal.
And the CMS proposal suggested that the Trump administration won't further try to dock provider taxes outside of congressional efforts — good news for hospital investors, Capstone senior vice president Wylie Butler wrote in an analyst note.
What to watch: There are some signs that Senate Republicans aren't as interested in cracking down on provider taxes as their counterparts in the House.
"It's not that I think that provider taxes are good; it's that the Medicaid reimbursements have been insufficient," Sen. Susan Collins (R-Maine) told reporters this week.
2. Means pick reflects new era in messaging
Tina Reed,
Eleanor Hawkins
Casey Means was nominated to become the new face of American public health. She's not a career doctor — but she knows how to go viral. That's the point. And the risk.
Why it matters: This is part of the Trump administration's broader strategy to prioritize messaging, allegiance and influence over expertise.
Driving the news: Means' nomination to become surgeon general drew major backlash from the medical establishment. It also didn't sit well within segments of Robert F. Kennedy Jr.'s public health movement, because Means wasn't strident enough on vaccines.
The administration has defended Means' qualifications, claiming her critics are worried that her popularity among "MAHA moms" could create "an existential threat to the status quo interests, which profit from sickness."
The big picture: Whatever the outcome, Means represents a continuation of the Trump administration's strategy of identifying and elevating public figures, influencers or creators who have clout within niche audiences of the MAGA-sphere.
"She is reaching people in new ways that I actually would like to see more 'trusted institutions' think about," Claire Wardle, an expert on health communication and misinformation at Cornell University, told Axios.
Yes, but: While she focuses on issues many people might find important, she also veers into areas in which there isn't scientific consensus, she said.
3. A Trump-Cuban alliance on drug manufacturing
Tina Reed
The Trump administration is partnering with several health companies, including Mark Cuban's Cost Plus Drug Company, to find new ways to make drugs or their key ingredients at the point of care, such as a hospital, officials announced Thursday.
Why it matters: The launch comes amid ongoing drug supply chain concerns, particularly as tariffs threaten to increase the costs or constrict access to key active pharmaceutical ingredients in the U.S.
Called Equip-A-Pharma, the program aims to lower production costs, reduce drug shortages, speed approval times and boost the rapid response to national emergencies, officials said.
But it's noteworthy because of the involvement of Cuban, a fierce Trump critic, who called him a "snake oil salesperson" last year. His company aims to fundamentally change drug pricing via a direct-to-consumer model.
Cuban did not respond to a request for comment.
The collaboration includes the HHS public health preparedness arm and the Defense Advanced Research Projects Agency, along with Battelle Memorial Institute and Aprecia, Bright Path Laboratories and Rutgers University.
The partners are expected to submit abbreviated new drug applications to the FDA within a year, officials said.