“If you're an expansion state… you're drawing 90% of the funding. In other words, for every dollar the state puts in, you get nine from the government. So this provider taxing is a really good deal. I draw it down, then I spend it out somewhere, and I get nine bucks back.”
Newt's World · US Politics · October 2026
Context
The host had described how states tax their own hospitals and have the federal government count that tax toward its Medicaid match. Zinberg explains the matching-fund arithmetic that makes the practice attractive to states.
Transcript
…And these are all important provisions that are protecting the public fiscs and making sure that the money goes to where it's supposed to go. One party thinks that money is unlimited, but the rest of us know that money is not unlimited and you have to husband it and point it in the right direction.
…to subsidize. So the higher the tax, the more the state got in federal subsidy. And there were actually consultants in the early days who would go around and train states into how to maximize their income even though they weren't doing anything for it. I mean, the whole thing was a paper gimmick.
These were the provider taxes, and there were some half-hearted attempts to limit it by limiting the percentage that you were allowed to tax and collect as compared to revenue. But we're really limiting that and phasing a lot of that out and not allowing any new provider taxes in the one big, beautiful bill. But, you know, what people don't understand is Medicaid is a federal state system and states draw matching funds from the federal government. And if you're an expansion state and for your population, your expansion population, you're drawing 90% of the funding. In other words, for every dollar the state puts in, you get nine from the government. So this provider taxing is a really good deal. I draw it down, then I spend it out somewhere, and I get nine bucks back. So that's why I turned it as a money laundering scheme.
We recently have begun to track big urban hospitals that will buy a small rural hospital, and then claim that they're a rural hospital so that they can get the extra funding that we now pay to help rural hospitals. I mean, you have gigantic hospitals in the middle of downtown. By any reasonable…
Yes, it is a scam and it's been ongoing. And sadly, it's been encouraged by a lot of these government policies. And that's what we were trying to counteract in the one big, beautiful bill.
Coming up, Joel discusses whether Medicaid is sustainable and the fraud, phantom enrollees, and improper payments costing taxpayers billions every year. How much do we have to reform Medicaid and CHIP, which now between them cover about 31% of all Americans, about a third of all Americans? And it…
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