Medicaid patients to be the surprise victims of margin tax

Chantal Lovell

LAS VEGAS — If the margin tax passes, it will claim a group of unlikely victims: Medicaid patients.

That’s according to the owner of a large, Southern Nevada nursing home who says, if voters approve the new tax November 4, he will be forced to stop accepting new Medicaid patients, leaving them with fewer health care options, extending their treatment wait times and worsening their outcomes.

And he expects other health care providers to do the same.

“In order to protect my employees and keep my business open, I’m going to have to cut the number of unprofitable Medicaid patients I accept,” said the nursing-home owner, who asked not to be identified so as to not send his employees and patients into a panic.

When it comes to Medicaid patients, nursing homes — like hospitals — only receive a fraction of the cost for treatment. The reimbursement is so low that this nursing home not only fails to make a profit when it serves such patients — it actually loses money.

While the nursing home has been able to make ends meet in the past by using the profits from other patients to offset the losses incurred when treating Medicaid patients, having to pay the margin tax would make it impossible to continue this practice. The losses would simply be too great for the nursing home, which has failed to turn a profit — only breaking even — for the past 13 years.

Because the margin tax would force small businesses to pay on the revenue they bring in — not the profit left over after salaries and bills are paid — unprofitable businesses like the nursing home, or even mom-and-pops that are losing money, would be forced to pay. The nursing-home owner estimates his margin tax bill would be $300,000 to $400,000 per year.

This would push the nursing home into the red.

“How many businesses that are losing money for six to eight months can keep their doors open?” the owner asked.

Because many of his employees worked at the nursing home for so long, the owner said he is committed to keeping them employed and wants to avoid salary cuts, something he expects many other businesses to consider if the tax passes.

Instead, he plans to reduce the number of Medicaid patients he accepts and take on more privately insured patients who can pay the full tab for their care, thereby reducing the nursing home’s losses.

At his facility alone, the change could affect over 1,000 Medicaid patients per year who would lose service if the margin tax is passed. Making matters worse, said the nursing-home owner, is that many health care centers are already rejecting Medicaid patients because of the many cost increases resulting from Obamacare.

“I’m one of the last places to accept Medicaid patients,” the owner explained. Medicaid patients make up a majority of the patients at his nursing home.

Though passage of the margin tax would make it even harder for these poverty-stricken patients to find the care they need, this is the only way the owner foresees being able to stay open, keep hundreds employed and serve privately insured and Medicare patients who are able to cover the cost of the care they receive.

The owner said Medicaid patients are just one group that will be directly affected by passage of the margin tax, despite supporters’ inaccurate claims that only “big business” will pay.

“They say this is a business tax, but it’s not. It’s a consumer tax. Prices are going to be raised, it’s going to destroy jobs in the state, it’s going to kill a lot of small businesses,” he said. “To kill small businesses in Nevada and make middle class people pay more is not a fair tax and it’s not right for Nevada.”

Chantal Lovell is the deputy communications director at the Nevada Policy Research Institute, a non-partisan, free-market think tank. For more visit or