NCPA - National Center for Policy Analysis


November 14, 2007

More than 30,000 Medicaid providers in seven states failed to pay more than $1 billion in federal taxes last year, but the government can't trim health care payments in order to collect, according to a report to be released today.

In its fifth report to a Senate panel investigating tax cheats that do business with the government, the Government Accountability Office (GAO) says that about 5 percent of Medicaid providers in the seven states cheat on their taxes -- particularly payroll taxes collected from employees:

  • The latest report follows others that detailed how tens of thousands of defense and other government contractors and Medicare providers also cheated on their taxes; all told, the reports show, nearly $10 billion went uncollected.
  • Since the inquiry began in 2003, the government has reduced payments in order to recover about $122 million in back taxes; the most has come from defense contractors: $78 million, including $31 million last year.

With Medicaid, however, it won't be easy to collect.  The federal government pays about 57 percent of the $324 billion cost for the federal-state health care program for the poor and disabled, but it is run through the states.

Source: Richard Wolf, "Probe finds 30,000 Medicaid providers cheating on taxes," USA Today, November 14, 2007.

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