Limits on Medicaid program fund transfers.

Recent Federal legislation has curtailed many of the so-called creative ways states previously used to fund their Medicaid programs. Specifically, the Medicaid Voluntary Contributions and Provider-Specific Tax Amendments of 1991 prevent states from using voluntary donations and taxes on healthcare providers to obtain increased Federal matching funds. In the future, therefore, many state governments may be forced to make a difficult choice between either increasing taxes significantly to finance health care for the poor or drastically reducing Medicaid rates and coverage.