When Gov. John Kasich signed the budget legislation for the new fiscal year, which began on July 1, 2017, he vetoed a number of provisions, as we explained at the time. One of these was designed to help counties and transit authorities cope with the revenues that they were going to lose from the elimination of the sales tax on Managed Care Organizations (MCO). At issue is more than $600 million.
A fact sheet put out by the state, titled Responsibly Replacing the Medicaid MCO Sales Tax, notes that Ohio’s sales tax on MCOs, which is based on Medicaid payments that the MCOs receive from the state, has been in place since 2009. But in 2014, the federal Centers for Medicare and Medicaid Services (CMS) declared that as of July 2017, Ohio’s Medicaid MCO sales tax would no longer be a permissible taxing method used to draw down Medicaid matching funds from the federal government.