Editorial: Federal tax abuse

Saturday, Nov. 17, 2007 | 7:19 a.m.

Medicaid is a joint federal-state program that provides about 55 million poor people with health care coverage. It paid medical care providers about $324 billion in 2006.

But a recent federal audit says more than 30,000 doctors and other health professionals who provide care to Medicaid patients owe at least $1 billion in taxes.

The report released this week by the Government Accountability Office, the investigative arm of Congress, says the tax-delinquent Medicaid providers make up about 5 percent of all Medicaid providers.

About 55 percent of the tax debt consists of payroll taxes and 31 percent is personal income taxes, the GAO says. The remaining 13 percent includes corporate income, excise and unemployment taxes.

"Many of these individuals accumulated substantial assets, including million-dollar houses and luxury vehicles, while failing to pay their federal taxes" and some also were "sanctioned for substandard care of their patients," the GAO report says.

In one case, the GAO reports, the operator of several nursing homes who owed $14 million in federal taxes also owned a $2 million, 10,000-square-foot home and vacationed in Las Vegas, Reno and Hawaii, where "the owner bought a $16,000 Rolex watch, the day before one of the required federal tax deposits was due."

Under federal law, owing taxes does not prohibit health care providers from enrolling in the Medicaid program. Obviously, such a rule could make it more difficult to ensure that poor people would have adequate access to medical care.

Nonetheless, the federal government can't just ignore such egregious abuses.

We agree with the GAO's recommendation that the Internal Revenue Service carefully examine these providers' tax-paying records and aggressively pursue whatever collections or criminal investigations are necessary.