According to the Legislative Budget Board (LBB), HB 3305 is not expected to have a fiscal impact on the state. The proposal to create a County Health Care Provider Participation Program in certain large counties does not require the appropriation of state funds, nor does it alter existing state revenue streams or Medicaid formulas. Instead, it authorizes specific counties to collect mandatory payments from nonpublic hospitals for the purpose of funding local contributions toward Medicaid supplemental payments​.

From the perspective of local governments, the LBB anticipates no significant fiscal impact. Although counties would be empowered to administer new local provider participation funds and collect mandatory payments from hospitals, the structure of the program is designed to be self-contained. That is, the funds collected are designated for a specific use—serving as the nonfederal share for Medicaid supplemental payments—and are not available for general local spending. The bill includes oversight mechanisms such as public hearings and banking requirements to ensure the proper use of funds, thereby minimizing administrative risk or cost for counties​.

Overall, the fiscal structure of the bill is revenue-neutral at the state level and procedurally bounded at the local level. While the bill facilitates access to additional federal Medicaid dollars, it does so through the reallocation of private funds from hospitals rather than from public budgets. The program’s design intends to enhance Medicaid payment efficiency in large counties that lack a hospital district without burdening taxpayers or the state treasury.

HB 3305 proposes to authorize certain counties—those with large populations and without hospital districts—to create and operate a County Health Care Provider Participation Program. This program allows counties to assess mandatory payments from nonpublic, inpatient hospitals and deposit those funds into a Local Provider Participation Fund (LPPF). The fund is used to draw down federal Medicaid dollars to support uncompensated care and rate enhancements for eligible providers. While the goal of expanding access to healthcare and maximizing federal support is understandable, the mechanism and structure of the bill raise substantial concerns with respect to liberty principles.

First and foremost, the bill represents a clear expansion of the scope and authority of local government. It enables counties to exercise new financial powers—specifically, compelling payments from private institutions—that resemble taxation without consent or voter approval. Though labeled as “mandatory payments,” these assessments function as quasi-taxes imposed on private, nonpublic hospitals, shifting the cost of public healthcare obligations onto a select group of private actors. This represents a significant departure from the principle of limited government.

Additionally, the bill imposes a new regulatory and financial burden on private healthcare providers. Nonpublic hospitals are required to submit detailed financial data, comply with annual audits, and remit payments based on their net patient revenue—up to six percent annually. There is no opt-out provision, and hospitals have no guaranteed benefit or control over how the funds are ultimately used. This violates key tenets of free enterprise and private property rights by compelling private entities to subsidize public programs without consent or contractual protections.

While the bill does not impose direct costs on taxpayers, it introduces indirect risks. Hospitals faced with new financial burdens may be forced to reduce services, delay expansion, or increase prices in ways that impact patients. Although the statute prohibits passing along the assessments as direct surcharges to patients, it cannot realistically prevent downstream cost shifts, especially in areas where hospitals operate on narrow margins or limited competition.

Furthermore, HB 3305 creates a concerning precedent. Allowing government to fund its operations or obligations through coercive levies on private entities—rather than through transparent taxation and appropriations—risks normalizing a model of compelled participation. This model, while administratively convenient, erodes voluntary association and blurs the line between private enterprise and public financing.

Finally, while the bill includes administrative safeguards (such as public hearings, transparency requirements, and a sunset clause), these provisions do not offset the core structural issue: that counties are empowered to forcibly extract revenue from private institutions to support a public program. Even if technically permissible under federal Medicaid rules, this approach undermines the foundational balance between public power and private rights.

For these reasons, the recommendation is NO. While amendments could improve the bill, its fundamental structure and reliance on coercive financial mechanisms violate core liberty principles. Should the legislature wish to pursue this policy objective, it should do so through voluntary partnerships or publicly accountable funding structures that respect individual choice and enterprise freedom. Texas Policy Research recommends that lawmakers vote NO on HB 3305.

• Individual Liberty: While the bill does not regulate individual behavior or directly limit personal freedoms, it creates an environment where the financial pressures placed on private healthcare institutions may indirectly impact patient choice and access to care. For example, hospitals burdened by mandatory financial assessments may limit services, consolidate operations, or pass costs on through indirect means. This can reduce the availability or affordability of care options, ultimately narrowing the sphere of individual healthcare autonomy.

• Personal Responsibility: The bill shifts part of the burden for funding public health care (especially for the indigent or underinsured) from the general public to private, nonpublic hospitals. This could be viewed as undermining personal and community-based responsibility by institutionalizing a funding mechanism that shields the broader public from the costs of public services, relying instead on a select group of private actors. It effectively removes a level of democratic accountability by circumventing tax-based funding that would typically require public justification or consent.

• Free Enterprise: HB 3305 imposes mandatory financial assessments—up to 6% of net patient revenue—on private, nonpublic hospitals. These are not voluntary contributions, and there is no guarantee of proportional return on investment or direct benefit to the paying institutions. This distorts market dynamics by forcing certain businesses to subsidize a government-managed fund, regardless of their individual financial position, business model, or willingness to participate. It sets a troubling precedent where private entities are treated as revenue instruments for public programs.

• Private Property Rights: By compelling private hospitals to pay into a fund managed by a county government, the bill infringes on private property rights. These institutions are required to surrender a portion of their revenue to support a program they do not control and may not directly benefit from. The lack of consent or opt-out provisions compounds this concern, as does the fact that the funds cannot be used for general revenue or reallocated to benefit the contributing entities without strict limitations. In effect, it appropriates private resources for public use without direct compensation or democratic oversight.

• Limited Government: This bill expands local government authority in both scope and function. Counties that previously had no role in collecting mandatory payments from private hospitals are now authorized to create new financial systems, manage bank accounts, oversee audits, and engage in intergovernmental fund transfers with the state. These are significant powers, akin to taxing authority, granted without voter approval or broader public input. Though the bill includes transparency requirements and a sunset provision, the underlying empowerment of government at the expense of private autonomy runs contrary to the principle of keeping government narrow in scope and power.

• SB 1375 (Same As)