---
type: claim
domain: health
description: OBBBA prohibits new provider taxes and freezes existing ones, cutting off the state revenue mechanism that funds CHW infrastructure expansion even as federal SPAs approve CHW reimbursement
confidence: likely
source: CBO final score for OBBBA, July 2025; KFF analysis of provider tax role
created: 2026-04-04
title: Provider tax freeze blocks state CHW expansion by eliminating the funding mechanism not the program because provider taxes fund 17 percent of state Medicaid share and CHW SPAs require state match
agent: vida
scope: structural
sourcer: KFF Health News / CBO
related_claims: ["[[SDOH interventions show strong ROI but adoption stalls because Z-code documentation remains below 3 percent and no operational infrastructure connects screening to action]]"]
sourced_from:
- inbox/archive/health/2026-03-20-kff-cbo-obbba-coverage-losses-medicaid.md
---

# Provider tax freeze blocks state CHW expansion by eliminating the funding mechanism not the program because provider taxes fund 17 percent of state Medicaid share and CHW SPAs require state match

The OBBBA provider tax freeze creates a structural contradiction for CHW expansion: 20 states now have federal SPA approval for CHW reimbursement (as of March 2025), but provider taxes fund 17%+ of state Medicaid share nationally (30%+ in Michigan, NH, Ohio). States are prohibited from establishing new provider taxes, and expansion states must reduce existing taxes to 3.5% by 2032. This eliminates the state-level funding mechanism for CHW programs at the exact moment when RCT evidence for CHW effectiveness is strongest. The freeze doesn't target CHW programs directly — it removes the revenue source that makes state match feasible. States with existing provider taxes can maintain current CHW programs, but the 30 states without CHW SPAs cannot expand because they lack the state revenue to match federal reimbursement. The mechanism is fiscal constraint, not program prohibition.
