YOUNGSTOWN, Ohio (WKBN) – Sales tax from Medicare organizations used to draw millions of dollars to Ohio. Now that the state isn’t getting that revenue, Mahoning and several other counties are feeling the loss.
The federal government wants states that tax Managed Care Organizations (MCO) to either tax all MCOs or charge another type of tax. The purpose of Managed Care is to manage cost, implementation and quality of healthcare.
MCOs in Ohio include three national for-profit plans (Buckeye Community Health Plan, Molina Healthcare of Ohio, United Healthcare Community Plan), one national nonprofit plan (CareSource) and one local for-profit plan (Paramount Advantage).
Mahoning County Commissioners and Auditor Ralph Meacham met Monday morning to present the State of the County and discuss the budget. Meacham said losing the tax will be a problem moving forward.
“We’re looking at about a 9.6 percent reduction starting in the fourth quarter of 2017. That translates to a $3.6 million reduction, not just one year, but every year here after,” he said.
Without the MCO taxes, Mahoning County will lose about $3.6 million in annual revenue, this year and every year hereafter, Meacham said.
“It does affect us by almost 10 percent, but there’s smaller counties that will be affected by 20 percent.”
Since the recession, counties have grown more reliant on sales tax revenue. Medicaid services have been making up much of those sales taxes.
“This started several years ago when the state needed to make a contribution for Medicaid and it decided to tax these Medicare organizations,” Meacham said.
The state has until the end of June, or the end of the fiscal year, to come up with a fix.
Commissioner David Ditzler said Ohio should have followed the federal government’s rules and taxed all MCOs.
“It’s incumbent upon them to tax them all equally so the governments don’t lose money and drive it all down to the townships, and the counties, and the cities and villages like they’ve continued to do.”
Meacham said the best solution the state government has come up with so far is just two years’ worth at 80 percent of the loss.
“We can’t do anything about it. The state legislature will have to act,” he said.
Some local senators and legislators said they’re adamantly working on the budget and finding a fix.
Rep. John Boccieri said taxing all MCOs is still an option. He said it’s unlikely that the federal government will fix the problem.
Meacham also showed Standard and Poor’s findings for 2016. S&P said Mahoning County has a weak economy compared to others in the state with higher unemployment numbers.
However, the findings showed the county has strong budget flexibility and debt capacity.
Other concerns were the population decrease and unemployment rate.