Vermont Legislature SmartTranscripts:

[Nolan Langweil (Joint Fiscal Office)]: We thought they had

[Rep. Alyssa Black (Chair)]: a bowl of water. We're live. Oh, we're live. We're for neighborhood. Yikes. Welcome back, everybody. It's the afternoon. Still January 7 at the top in the Midwest. Our spectacular JFO, Norman Feenwell, who is gonna We heard about this yesterday when they were giving Us updates around 1891. Frankly, is one of the largest and it's one of the tangible things that we know we're going to lose. So I thought it would be great if Nolan could give us a refresher on what provider tax is and do a little bit more in-depth because I think it's not understood well.

[Nolan Langweil (Joint Fiscal Office)]: So for the record, Nolan Langold, the Joint Ciscal Office, do you want me to talk about Do you want me to go in-depth on FMAP?

[Rep. Alyssa Black (Chair)]: I want you to do both FMAP because we always need refreshers on FMAP, and I'm looking forward to your slides that have the dollar signs and the I've got dollar signs.

[Nolan Langweil (Joint Fiscal Office)]: I'm going

[Rep. Alyssa Black (Chair)]: to do a really Vermont orders.

[Nolan Langweil (Joint Fiscal Office)]: Yeah, I'm going to do FMAP fast because you only have forty five minutes. I would, and then I'll move into provider text. You will have lots of questions. I would say 90% of them will probably be answered in future slides. So maybe for the first one, well, can go, we can play it by ear. But I just want to say, because of our time, don't want to over question, especially because the answers are always there ahead of us.

[Rep. Alyssa Black (Chair)]: We have your slides on our website. Yes,

[Nolan Langweil (Joint Fiscal Office)]: refresh.

[Rep. Alyssa Black (Chair)]: Oh, wait, I just didn't scroll down far enough. Sorry.

[Nolan Langweil (Joint Fiscal Office)]: So before we talk about provider tax, I think it is helpful to talk about FMAP. FMAP means Federal Medical Assistance Percentage. And what that is, is that is the formulas for how the federal government matches state dollars in the Medicaid program. So just from a state budget context, the fiscal year '25, we have, you, the state appropriated $9,200,000,000 total, the whole state budget. 2,400,000,000 of that total appropriation was Medicaid. And when you think about it from a federal state standpoint, of our total appropriation, of the total 9,200,000,000.0 appropriation, approximately 3,200,000,000.0 or 34% of the total state budget are federal dollars. About half of those federal dollars are for Medicaid, just again to give you some context of the spend. Overall Medicaid expenditures, again, dollars 2,400,000,000.0. Medicaid, for those who remember, is a state federal partnership. At some point, I would like to come back in and do a little bit more conversations on global commitment, people want a refresher on global commitment, what it is. Most, not all the federal funds, so the pie chart on the right is just like, here's share of state dollars versus federal. So overall in Medicaid, 62% are federal dollars, 33% are general fund, another 4% are just other things, right? Not all of that's FMAC, sometimes we have some pure federal grants in there, but it's mostly FMAC. So federal match dollars range between 5090%, depending on the program and or the expenditure. So FMAP is the share of state Medicaid benefit costs that are paid by the federal government. It is a very complicated formula, but the dumbed down version of how I understand it, and we'll try to explain it to you, is it's basically a formula that looks at things, but essentially is calculated based on a three year average of state per capita personal income compared to the national average. So every year, the federal government tells us what our FMAP is. They're the ones who calculate it. When our FMAP goes down by 1%, we're always like, oh no, we have to find another $18,000,000 just to maintain the same level of service. And then next year, it might go up by 1%, like sweet, we have $18,000,000 The thing that we forget is that if our FMAP's going down, it actually means that our per capita income is getting a little better. So when the F MAP goes down, it's actually something that our economy is doing a little better. So it's this weird thing to put, from a state's budget standpoint, we're like, oh no, we have to find $20,000,000 just to maintain the services. But it's also reflective of a bigger picture, just be mindful of that. The other rules are that at the federal level is that no state can receive less than 50% or more than 83%. So who gets 50? Those are the states that have high per capita income.

[Rep. Alyssa Black (Chair)]: And I'll round two for a brief second and ask just because of what you were talking about there around, you know, if our FMAP goes down, it means that we're doing better. On average compared other states. Has there been any tax analysis done? If our F map goes down, whether or not our tax receipts are going up because There's people are doing never been an illicit. It's never

[Nolan Langweil (Joint Fiscal Office)]: But I once looked at it and I compared it to this trend based on recessions. And there was a link where I did see a correlation. I don't know what the correlation was, but I did notice a trend that would make me scratch my head and say, that's a great project for a graduate student to do. But the tax department has never really taken the time or neither way to compare it because we

[Rep. Alyssa Black (Chair)]: I just didn't know if maybe we saw an equivalent increase in tax receipts, personal income tax receipts.

[Nolan Langweil (Joint Fiscal Office)]: But I did, like I said, I have seen a relationship, a correlation, which is different between recessions and RF map rates or the trend of RF maps.

[Rep. Alyssa Black (Chair)]: Sorry to interrupt you. No, that's fine.

[Nolan Langweil (Joint Fiscal Office)]: So the states, just for comparison of what other states are doing, other states have, so the states that have high per capita income, California, Connecticut, New Jersey, they're all 50% F Map. Then you have states that have low per capita, Mississippi, West Virginia, Alabama, you can see they're in like the 76%, 74%. We're kind of in that middle, and on the side, in the left side, you see compared to other New England states. So Connecticut, New Hampshire, Massachusetts, they're at 50, Rhode Island's 57.5. We're at 59.01. This federal is fiscal year 2026, Maine is 61. And if it has up or down, that means their FMAF went up from the previous year, went down from the previous year. I have another chart on a different slide that shows you the trends in the going up and going down. Actually, I can show you that. No, that's later. This is the slide that you were excited about. And basically, I think this explains it pretty well. Notice the Vermont Quarters.

[Rep. Alyssa Black (Chair)]: Nice touch.

[Nolan Langweil (Joint Fiscal Office)]: So, and it's funny because I never said anything, and I think Representative Black was like, hey, look, I'm not quarteris. And I was like, look, somebody noticed. But nobody noticed it for years.

[Rep. Alyssa Black (Chair)]: Can I share something personal here? I just wanna say, and I'm putting this right out here. I remember the very first time I met Nolan on Zoom and he had his little F map quarters and everything. And the thought in my head was, does this guy think that we're so dumb that we need a visual coin and dollar representation? I said to myself, oh my gosh, I love this. I really do need this. And yes, you are that dumb. I don't

[Nolan Langweil (Joint Fiscal Office)]: do it because anyone is dumb. I do

[Rep. Alyssa Black (Chair)]: it because

[Nolan Langweil (Joint Fiscal Office)]: it's fun.

[Unidentified committee member]: It's a great visual. It also enhances learning to have multiple media representations of new

[Rep. Alyssa Black (Chair)]: folks. Yes.

[Nolan Langweil (Joint Fiscal Office)]: I'm a visual person. And pretty soon, those settings don't mean to use.

[Unidentified committee member]: We can add sound to people. It'd be like, shoo, shoo, shoo, shoo, Like,

[Nolan Langweil (Joint Fiscal Office)]: Just visual, not verbal, not oral. All right, so we have multiple FMAP rates. We have our regular FMAP rate, which is most of the Medicaid program, gets it at fifty eight point eight one for federal and forty one point two percent for state. So what does that translate to? For every $1 we spend in the Medicaid program, we get another $1.43 MAP from the federal government for a gross $2.43 Gross is always the federal and state of mind, you're gonna hear me say that a lot gross. So here's the double edged sword, when we cut Medicaid, we cut a dollar out of Medicaid, we lose 2.43 in services, right? It goes both ways. But then people say, hey, we're leaving money on the table. Why aren't we putting more money? Well, because every dollar we don't put into that, we lose that elsewhere, right? So it it's just a conversation that's been had, I'm just throwing it out there. We also have our enhanced FMAPs. So we have the Children's Health Insurance Program. Remember before when Stephanie was talking about these eligibility groups? So in Medicaid, when you're on Medicaid, you just have a card that says Medicaid, or if you're a kid, just a Doctor. Dinosaur. But behind the scenes in the administrative structures, we care about what door did they come into to make them eligible? Were they low income? Were they disabled? Did they hit a certain threshold? For our children's health insurance program, there's 4,400 kids, that's a certain eligibility group, so they get a special badge. Now they're just considered Doctor. Dinosaur on their card, they don't know they're a CHIP kid, but from the administrative side, we're getting extra match on them because they meet certain criteria. Now, other confusing thing is that CHIP isn't actually part of Medicaid at the national level, it's in a different statute, but we administer it through our Medicaid program, so we consider it Medicaid because it's under our Medicaid, actually the Doctor. Tennisong umbrella. Then we have childless new adult. Don't let the name fool you, these aren't new adults. They were freshly adultized. It's just a name, but this is the expansion under the CARES Act. This is the expansion of the childless adults. The time they were like new adults, the program, they actually were already on our program, but under a catamount or something else, but this is just the name that was assigned at the time for that Medicaid eligibility group. That's what we call it. It sounds confusing, new adult, they're not new. It's just a name, don't read into it. Who was it? It's low income, childless adults who were not previously eligible prior to the Affordable Care Act. So those people were either on behalf or catamaran back in the day. But didn't have insurance. Or didn't have insurance, exactly. We're getting a ninetyten on that group. Now, it was weird because, bless you, when the expansion happened, states like Vermont were getting eightytwenty in that group, and states like Mississippi that did not provide any coverage for them were getting 100% match on those. They were paying $0 on that, and over a period of years, they got less, we got more, and everybody's ninetyten now. That was how it was passed the time. It's ninetyten in perpetuity until the law changes, because people say, how long is that gonna last? It's just until the law changes. So that's the match we're getting on that particular group.

[Rep. Alyssa Black (Chair)]: And I love thinking about this slide because when they presented to us, Monica presented to us yesterday, it's almost as though the new adult category are the ones that are targeted in HR1 to sort of lose eligibility. And so for every person that we're not covering because they've lost eligibility, we're not spending that dollar and not getting $9 back. It's a lot of money. This

[Nolan Langweil (Joint Fiscal Office)]: next slide is the 27 rates. These are the rates that we are, so the 26 rates are what you are looking at for budget adjustment, because that is the current fiscal year. When the administration releases their budget for fiscal year twenty seven, these are the FMAPs that they will be using. So I got those numbers, I created a new slide, found some more quarters.

[Rep. Alyssa Black (Chair)]: So we actually went up. Am I interpreting sort of

[Nolan Langweil (Joint Fiscal Office)]: a No, it actually went down by went down by a

[Rep. Alyssa Black (Chair)]: So pretty 1.2 I'll review the slide, you said we were at 59.1.

[Nolan Langweil (Joint Fiscal Office)]: Yeah, so the FMAP went down, the federal share went down.

[Rep. Alyssa Black (Chair)]: So that was less. Year, okay.

[Nolan Langweil (Joint Fiscal Office)]: So it's roughly a nickel less for every dollar we spend, right? It's like 5%. And then this slide I like, I'm gonna keep it brief because this is just the history of FMAP. So this just shows you the lower, the top one just kind of shows you like the trends. And then you can see we got for during the American Recovery and Reinvestment Act, we got a bump and then Affordable Care Act, we got a delay bump. Right? And then for, so that just kind of shows whenever the states have been recessions or whatever, FMAP is an area that's where our government has traditionally looked to to help states stabilize their economies. And then on the side there, this is this trending I was talking about where you can see if it's gray, that's where the FMAP from the federal side decreased and then the white is where it increased.

[Unidentified committee member]: So you can see it goes up, it goes down, it goes up, it

[Nolan Langweil (Joint Fiscal Office)]: goes down. And then the side there just shows you where we've gotten enhanced maps, FMAPs, and those are usually tied to some event, right? So the American Recovery and Reinvestment Act was during the Great Recession, right? So anyway, I wanna move on to provider tax because we're running out of time, but this was really meant to be just a kind of a quick primer. Let me find that one. Okay, there it is. Okay, everything you ever didn't want to learn about provider tattoo in five minutes or less. So what is, and I have Jen's name on her too, because Jen helped me put together the legal stuff in here. There's stuff about hold harmless and other stuff, and I can just run through it and she can just correct me when I mess it up. So what are provider taxes? So we call them provider taxes, but they are assessments on healthcare providers. And I have a list in the future about what those taxes are and who they are on, but essentially as I mentioned, Medicaid is a state federal partnership. The state can use these provider taxes to sort of generate funds, but we have rules, so we tax a provider hospital at 6%. We can then take that money, which is, I forget that, I probably have the amount that we raised. Percent on your what? Their net patient revenue, great question. You. Excellent question. I do have it later on. But let's say we raised $200,000,000 You could take that $200,000,000 and you can match it, and now you have $390,000,000 or something like that. And that's money that you have that you can now use to pay for the system. We all, I have a slide here that talks about how many states use provider taxes and which ones, but basically it's short, and I'll get into the details of it. It's a mechanism that states can use to raise money to help pay for Medicaid services, but they have to comply with federal law. The federal government says, fine, you can tax these people, but there are limits of how you do it, and that's what was addressed, and I wasn't saying attacked, it was attached to where I was

[Rep. Alyssa Black (Chair)]: going to,

[Nolan Langweil (Joint Fiscal Office)]: in HR1, And so the rules about that have changed. So provider taxes are deposited into the general fund. They used to be deposited into a separate fund, but now they're deposited into the general funds. And the reason I have this slide is it gives you a context of how big the provider taxes are. So in fiscal year twenty five, general fund accounted for 88% of, okay, so 88% of Medicaid funds were general funds. 25% of those general funds were provider tax. Say that again? 28%. Sorry, I can't read. So the revenues from provider taxes are 28% of the state funds, or if you look at the other side, they are 9% of total funds for Medicaid. Just to give you a sense when you compare, so the left side just shows you, of all the money we raise in the general fund for provider tax, 28% are from provider taxes. That's a lot. Yes, of the state dollars. And if you look at the whole pie, it's 9% of all the dollars, including the federal funds. So just to give you a sense of the magnitude of how much money we raise in provider tax and why it's a big deal if we lose.

[Rep. Alyssa Black (Chair)]: I have questions, Allen has a question.

[Nolan Langweil (Joint Fiscal Office)]: You get these taxes from healthcare related, Can you name some of them? It doctor? I said you, don't worry, your questions will be answered. You're in full service here.

[Rep. Alyssa Black (Chair)]: We just saw Diva with their ups and downs. They always break it down of total and then general funds So with if you actually, if you counted provider tax and took it out of what they list for general fund, How much general fund do we use as a percentage if you took the provider tax out of it?

[Nolan Langweil (Joint Fiscal Office)]: I hear what you're going.

[Rep. Alyssa Black (Chair)]: I'll do something else.

[Nolan Langweil (Joint Fiscal Office)]: So this always gets to be a funny question in terms of like, I look at the general fund as like a giant pond.

[Rep. Alyssa Black (Chair)]: Giant what?

[Nolan Langweil (Joint Fiscal Office)]: A giant pond.

[Rep. Alyssa Black (Chair)]: Pond.

[Nolan Langweil (Joint Fiscal Office)]: You put all this money into your pond and then you're scooping money out of the You're scooping water out of the pond to pay for your stuff. So in theory, that dollar I raised from provider tax isn't necessarily going directly to healthcare services, even though that's what it's being raised for. But in theory, it's just going to the general fund, pays for everything, including Medicaid. Now, if you were to say, okay, this is dedicated to this, you have a number. Bless you. I do have a number, and that's in a future slide. Oh, okay. So you already saw this slide, and you saw this slide. All the quarters are not quarters. Of course, it's the same slide. Okay, so this is the Jen stuff. Jen can either go through it or I can do it, it's up to you. Up to you. Why don't I just do it and then you can correct me when I mess it up, which I will. So provider taxes, these are the federal rules. Provider taxes, the federal prime, they must be broad based, which means they must apply across class of healthcare items, services, providers. So it can't be like, it attacks you, but not you, but not you.

[Rep. Alyssa Black (Chair)]: For primary care? What would be a class?

[Nolan Langweil (Joint Fiscal Office)]: Go ahead. No,

[Jennifer Carbee (Legislative Counsel)]: you're going to get to that if you've shown the

[Nolan Langweil (Joint Fiscal Office)]: I haven't yet, but we're getting there.

[Unidentified committee member]: The next page, look at the next page.

[Rep. Alyssa Black (Chair)]: That charge from the office budget in house. Okay, sorry.

[Jennifer Carbee (Legislative Counsel)]: So the broad based requirement is that if you apply provider tax to somebody in the class, the class being either the type of provider or the pharmacy claims or something like that, you have to apply it to all of everyone who fits in that category.

[Rep. Alyssa Black (Chair)]: Can't

[Nolan Langweil (Joint Fiscal Office)]: tax completely different than UVM.

[Jennifer Carbee (Legislative Counsel)]: Tax We couldn't say we're taxing non critical access hospitals to non critical access hospitals.

[Rep. Alyssa Black (Chair)]: Could we say we're gonna tax gastroenterologists but not urologists?

[Jennifer Carbee (Legislative Counsel)]: No, because it's

[Nolan Langweil (Joint Fiscal Office)]: No, because there are specific classes.

[Rep. Alyssa Black (Chair)]: We'll try the next page, which

[Nolan Langweil (Joint Fiscal Office)]: I'll get to. You're right. Okay.

[Jennifer Carbee (Legislative Counsel)]: I'll get excited about the

[Rep. Alyssa Black (Chair)]: next new ones. No one's gonna get to that.

[Nolan Langweil (Joint Fiscal Office)]: I'll get to why it's complicated. Okay, so they must be uniformly applied. So the same licensing fee across the class, per bed licensing fee across the block, same assessment rate on gross net receipts. So it can't, again, similar. And you must not hold providers harmless. So it cannot guarantee directly or indirectly that the tax paid will be returned to them and make them whole. In that instance,

[Unidentified committee member (possibly Rep. Allen "Penny" Demar)]: the federal laws.

[Nolan Langweil (Joint Fiscal Office)]: Yeah, so we can't say, okay, Copley, you paid $2,000,000 in provider taxes, we'll make sure you get that back. You can. The way they get that back is through their Medicaid utilization. So for instance, so like nursing homes, it was a perfect example, right, because they don't all have Medicaid, a lot of them are Medicare, right, so some may pay more in provider tax than they get back, and this all depends on what is their Medicaid caseload. If you're a provider with a low Medicaid caseload, you might pay in the provider tax, but not get any federal dollars back through that because you don't have people that are getting paid to that. And vice versa, you might have a high caseload and you actually get more back, but it's not, you may or may not, but this is an example, sorry, go ahead.

[Rep. Alyssa Black (Chair)]: Is there a requirement that

[Unidentified committee member (possibly Rep. Allen "Penny" Demar)]: it goes back into the healthcare system since it's in the general fund?

[Nolan Langweil (Joint Fiscal Office)]: It's not a requirement, it's what we are using it for and there are limits for what we can use it for or how we use it, right? So if we tax the providers, we can't, there's certain things we cannot do with it, right? Can say that correctly? Like we can't, and there's also rules, I'm getting confused here, but there's also rules of like what we, there's taxes that we think we're doing, but might actually be considered provider tax. So you just have to be very careful around provider taxes. So in theory, we are using it for general fund, but it's going the general fund, but there are parameters for how we spend that particular amount of money with the rules. And I'd say, see slide 11, which is where the changes are. So here are the provider classes that Jenna was talking about. There are 19 classes of provider taxes. So if it's red with a little star, that means we currently assess it in Vermont. So inpatient, outpatient, that's our hospital provider tax, we kind of combine that. Nursing facilities, that's our nursing homes. Outpatient prescriptions, we have a drug prescription provider tax and then we have EMS. We used to have home health, we eliminated that several years ago and then we also have one on this intermediate care facilities, but we don't actually have any intermediate care facilities anymore, so it doesn't really count. So those are the classes that we can, so to get to your question about gastrointestinal, they would be covered under physician services or if it is provided in a hospital, it is covered by the hospital provider tax, because it is part of their net patient routing, how that money is calculated. So services that are provided in a hospital all count as provider

[Jennifer Carbee (Legislative Counsel)]: So the question about could we have taxed one type of physician and not another type? No, because it must be broadly based across a whole class of physician services.

[Nolan Langweil (Joint Fiscal Office)]: Oh, and to get to the other thing that Jim mentioned comes up, why aren't we taxing more? So under the Chamblin administration, there was a proposal to do dentists. And the reason it sort of fell apart was because, so with the industries we regulate, nursing homes, hospitals, A, there's not a lot of them, and B, they're all regulated by the state and they have to submit financials. So we know how much net patient revenue hospitals have. We know how much nursing homes have. We know how much the home health, and they were EMS, we work with them and they provide us with this information. There are hundreds of dentists, different practices. They don't have audited financial reports, they are private companies. Non profits have audited financial reports, your home health, you know, but dentists are private. They don't have audited financial statements, so there was no way for us to find out how much they were paid, how much they wanted to pay. So in order for us to tax dentists, we would need their cooperation forward to the emergency medical services. They approached the state and we're like, we're interested in provider tax. Not all of them were, but most of them were, and we work with the industry for them to collect that data because they're participating in that process. So if we wanna, and also some of these may not provide a lot of revenue, So it's a lot of juice for the squeeze. So if we wanna do biotechs on dentists, okay, well, let's say there's 100 dental offices, we might have to create this whole administrative structure and we're not raising a whole lot of money out of it. Is it just worth the squeeze? May or may not be. So there was a study done in like 2011 that actually looked at this, how much would be raised if we taxed each of these and what would go into it and was a very interesting study. I mean, it's outdated, but still relevant in a way because the administrative complexities of it still apply. So here is what we pay or what we receive. And these are the rates. So the hospitals are taxed at 6%. In fiscal year twenty five, we raised $212,000,000 in provider tax. This is the majority of provider taxes. Fiscal year twenty six is forecasted to be $225,000,000 so we're expecting it to go up another $1,213,000,000 dollars Nursing homes, they're actually, when the nursing homes provider tax went into place, at the time when it was being negotiated with the industry, they were like, you know what, it's way easier for you to calculate provider tax base on per bed basis. It's still roughly 6%, but it's easier for them to calculate on a per bed basis versus their net patient revenue. So that's why it's done that way, but it still doesn't go over the 6% threshold. When we raised, it's pretty steady too, it's 14,400,000.0 almost for the dollar, give or take a 100,000 every year.

[Rep. Alyssa Black (Chair)]: So that's per bed regardless of whether someone's in it or not,

[Nolan Langweil (Joint Fiscal Office)]: right? Yeah, that's the bed, that's my understanding. Ambulances are 3.3%, why is it a 3.3%? That was the rate that was determined to raise the amount of money that was needed at that time. Now, as I fast forward to HR1, we cannot raise that any farther. So 6% is the max, but the ones that are below 6%, we now, because of HR1, we cannot increase provider taxes at all. We can't institute any new ones, and we cannot raise them. Intermediate care facilities, still on the books, 5.9%, we don't actually have any more intermediate care facilities anymore. There's a 10¢ per script for pharmacy, that rate is about $875,000 per year, and then home health sunset in 2023. So the total provider tax estimate is $229,000,000. Like I said, the majority of that are hospital, they account for 93% of our provider taxes. Just to give some kata bud.

[Rep. Alyssa Black (Chair)]: I'm thinking about what's coming over the next five years.

[Nolan Langweil (Joint Fiscal Office)]: Ah, I'm getting at that. Can you hold it for the last slide?

[Unidentified committee member (possibly Rep. Allen "Penny" Demar)]: Yeah.

[Nolan Langweil (Joint Fiscal Office)]: Okay. Context. Provider tax have long been associated with Medicaid programs, and this is according to Kaiser Family Foundation, now they just go by KFF straight. In 2004, 35 states had at least one provider tax. By 2024, 49 states in DC had at least one provider tax. The most common type of provider tax is actually nursing home provider taxes, 46 states, 45 states have hospital provider taxes, and approximately 13 states, including Vermont had provider taxes greater than 5.5, 20 states had provider taxes that were lower than 3.5 on hospitals, and then 32 states had intermediate care facilities, just to give you a sense. Now everybody is going be frozen into those rates, no new provider taxes and cannot increase the rate. Impacts at HR1. So there is gonna be a phase down over between 2028, federal fiscal year 2028 and 2032. In Vermont, only the hospital provider tax is actually affected, That's because nursing homes nursing homes were excluded. There was another one, home health, I think, was also included. Intermediate Oh, Intermediate care, that's right. Two were excluded, but ours were below, so those were excluded, sorry. And then we have ambulance provider tax, but it's 3.3%, so it's below the 3.5% threshold. So really the only one that's going to be affected is the hospital for biotechs. That said, it's the biggest one. This is the impact, this is the estimated impact over time. These are a little bit different than what I actually presented to you yesterday. They're similar, but they're different, and these are my estimates, not that we dispute each other, we just haven't come together yet to say this is our agreement, right? So it kicks in in fiscal year 'twenty eight. We're expecting a $15,000,000 hit the first, and then 35 the second year, and 57 to 30, and of course, these numbers continue to move, but by my current estimates, by 2033, we would have $113,000,000 less in provider taxes. So this is my estimate based on the cap. This will evolve, These are the numbers that will probably be in the e board that are coming up, and as we get more information or as it gets instituted, these will evolve. These are the preliminary estimates of what we think the impact will be based on, now those could change based on changes at the federal level, they could change based on any policies we make, they could change based on any, all kinds of things, but this is my current preliminary estimates. I cut you off. What was your question, Chaya?

[Rep. Alyssa Black (Chair)]: Well, my question is Lots of questions, you won't be able to answer, and you probably should answer, where can we make up this revenue? But in the vein of where we can make this up, if the providers are paying 3.5% less than they were before, shouldn't there be a commensurate drop in the rates that Medicaid pays them? Because while the state is losing that 113, that 113 is staying with the providers as revenue. They're not paying it out in the tax. So it's going on their bottom line. I've had this question asked. Would we be cutting them by $113,000,000

[Nolan Langweil (Joint Fiscal Office)]: I think it's complicated answer, and I don't think that I can answer it other than to say that the hospitals pay $200,000,000 in provider tax, but I don't know what their total Medicaid gross reimbursements were. I guarantee they're more than $212,000,000 So that goes to show that hospitals are probably getting that money back to the match. Now, again, I don't have those numbers, so I can't say, but I don't have any answer for that. Maybe I'm wrong, maybe it's not getting, maybe they'll pay $220,000,000 on Medicaid, I don't have that number in front of me. But I mean, it's a good question, but I don't think it's that simple unfortunately, but that's something I would have to look at. I think it's also something that Vaas probably had a strong opinion on. But what I would say is 113,000,000 less general fund, if you take all that general fund out of Medicaid, you lose all that match, so you're gonna lose $300,000,000 in spending. In

[Rep. Alyssa Black (Chair)]: spending power.

[Nolan Langweil (Joint Fiscal Office)]: Now your levers to your other question are raise revenues, cut services, or shift general fund from other areas of government so you make the cuts in other areas of government? And I think the answer will probably be you're going to consider all of those. Because you'll say, okay, well this dollar is only a dollar in fish and wildlife, but it's $3 in Medicaid. But again, that comes down to legislative and executive decision making. And it's

[Rep. Alyssa Black (Chair)]: only, and I use the word only, dollars 113,000,000 loss general fund, but ultimately it's over close to $300,000,000 loss in the total budget. Money in federal funds.

[Nolan Langweil (Joint Fiscal Office)]: Well, I can't speak to the motivations of the federal government. What I can say is that in HR1, they assume savings in FMAP having to be paid out to states because of this. They have made assumptions around that states are gonna make cuts in Medicaid and they will save money on the FMAP. That's where this is coming from. It's coming from a savings at federal level, because that's what they assume. They can't say it's their motivation, but they've booked it in the offset savings. And this is a big one because you look at states like California, their numbers, someone said that our budget is budget dust compared to California. We're error. A Budget dust. Budget dust. Our total Medicaid budget is a rounding error in California. But at the federal level, you combine all the states, that's not a significant amount of that the federal government can assume will be bought back, whatever you want to say. Again, I won't speak to the motivations, I can just say they book savings under the assumption that states will cut, make Medicaid cuts to offset the loss.

[Rep. Alyssa Black (Chair)]: Thanks. You're actually happy now? Yeah, go ahead.

[Unidentified committee member (possibly Rep. Allen "Penny" Demar)]: Go ahead, one and I'm not quite sure how to code it, your projected estimate is sort of, it's just half of what we have now, And so it almost seems like it's constant, like you're assuming constant revenues over that next five year

[Nolan Langweil (Joint Fiscal Office)]: period. Well, think about it. Yeah, so I'm assuming that sort of based on So I'm going to finish

[Unidentified committee member (possibly Rep. Allen "Penny" Demar)]: the question. So we're assuming healthcare costs and whatever, won't go up?

[Nolan Langweil (Joint Fiscal Office)]: No, I'm Okay, assuming it

[Unidentified committee member (possibly Rep. Allen "Penny" Demar)]: but why wouldn't the provider tax go up?

[Nolan Langweil (Joint Fiscal Office)]: I do assume provider tax goes up, but it's also cut, so each year it goes up by 0.5%. So I'm assuming a 3% growth, but then a 5%, 0.5

[Unidentified committee member]: cut, So 0.5

[Nolan Langweil (Joint Fiscal Office)]: there's growth built into the base in terms of we're taxing net patient revenue. I assume that that's gonna grow at 3%, but that we're losing 0.5% every year. So, and it's half because we're at 6%, and then we're gonna be at 3.5%, but there's growth in that base. It's a good question, But we're not assuming that spending is

[Rep. Alyssa Black (Chair)]: going be great, thank you.

[Nolan Langweil (Joint Fiscal Office)]: There are a lot of moving pieces. Numbers will, next time you see me, the number might be 110, it might be 120. It's the current thinking. It's a great question, and it's going to continue to evolve. Thank

[Rep. Alyssa Black (Chair)]: you. Everybody fully gets the provider text now, right? Oh, yes. All right. We can go off of live

[Nolan Langweil (Joint Fiscal Office)]: and