Paragon Institute Report: $19B in State Medicaid Funding at Risk from MCO Tax Phase-Out
CMS released guidance requiring states to wind down MCO taxes by end of FY2026 under H.R. 1 provision. California's MCO tax raises $8.4B in 2025 (99%+ from Medicaid MCOs), generating a projected $19.4B over 4 years through federal matching.
CMS estimates $33-75B in federal savings 2026-2030. For California FQHCs, this threatens the Medi-Cal rate increases and program expansions funded by Prop 35 MCO tax revenue.
Paragon Institute analysis shows states have no state-funded replacement.
Primary source
Paragon Health InstituteSource packet
This story's primary source + 4 related tracked stories with theirs — one print-ready digest for your team or board packet.
Free — subscribes you to the weekly Intel Brief. Individual sources are always clickable above, no email needed.
FQHC Talent. (2026, April 7). Paragon Institute Report: $19B in State Medicaid Funding at Risk from MCO Tax Phase-Out. Primary source: Paragon Health Institute. Retrieved July 28, 2026, from https://www.fqhctalent.com/intel/paragon-institute-19b-mco-tax-exposure-april-2026
More in Funding & Budget
Dec 31
CalAIM Section 1115 Waiver Expires December 2026 — $1.2B/Year at Stake
Jul 21
CMS defers $867.5M in federal Medicaid funds from California DHCS, with a July 31 documentation deadline on the largest line
Jul 21
D.C. Circuit: drug makers can't force a 340B rebate model without HHS approval — the Secretary, not manufacturers, controls the program
Jul 21
Samuel Dixon Family Health Center wins $655K in state funding to erase the mortgage on its Newhall behavioral-health clinic