A hospital consortium in Kentucky is pushing a novel way to narrow the state’s $200 million-plus funding deficit: expand provider taxes to additional provider groups. If successful, the approach could be a model for other states to follow, advocates claim. 

“Balanced Health Kentucky,” as the new group is called, is calling for the Bluegrass State to extend its provider tax — now paid by hospitals, nursing homes and pharmacies — to additional provider groups. They note that only five out of 18 provider categories must pay these taxes. Among the other groups they would like to see share in the burden: chiropractors, optometrists, psychologists and therapists.

Such an expansion would help raise $200 million or more in new revenue, they claim. The organization did not specify which groups should be included, or the specific tax rate. Kentucky collected about $296 million in provider taxes in its last fiscal year. About 27% of that, or nearly $81 million, came from nursing facilities. The vast majority, about $182 million, or 61%, comes from hospitals.

Riggs Lewis, hospital executive and president of the group, thinks this conservative tax policy can help pay for Medicaid expansion in 30 states, and is putting together webinars for state regulators elsewhere to consider.