Ga. lawmakers try to avoid hospital tax

tfain@macon.comJanuary 26, 2010 

State legislators are looking for a way to avoid approving Gov. Sonny Perdue’s proposal to tax hospitals to prop up the state’s public health- care budget.

But cuts needed to set aside the governor’s call for new revenue will be difficult to come by, officials acknowledged.

Speaker of the House David Ralston said Monday he has tasked the House Appropriations Committee with finding enough money to avoid the proposed 1.6 percent tax on hospital revenue. He said the cuts likely would be spread throughout the budget, not simply taken from the health-care portion. The generated revenue would be sent back to many facilities to keep the state’s Medicaid program for the poor from a major defunding.

Ralston, R-Blue Ridge, wasn’t specific about the cuts, which would have to amount to hundreds of millions of dollars in an $18.2 billion fiscal 2011 budget.

The “hospital provider fee” would charge hospitals a 1.6 percent tax on “net patient revenue.” That would generate about $297.8 million in the next fiscal year, according to the governor’s budget proposal. A similar 1.6 percent fee on managed care would generate another $97.2 million.

Money would flow to some care providers and away from others. The Medical Center of Central Georgia stands to lose $7.7 million, according to a preliminary estimate from the Governor’s Office of Planning and Budget. Hospitals, doctors, dentists and insurance companies that serve a higher percentage of Medicaid patients would benefit, Perdue and his head of the Georgia Department of Community Health have said.

As for what “net patient revenue” is, Medical Center President and CEO Don Faulk explained it like this: Hospitals would normally charge a certain amount for care they provide.

But due to various agreements, they have to subtract out adjustments and discounts given to certain health-care plans and the government. The adjusted amount left is net patient revenue, he said.

The $395 million in new state spending on health care would allow the state to draw down federal money to support Medicaid at a ratio of three federal dollars for every one in state. That means the full impact from the two fees would be closer to $1.4 billion.

Lt. Gov. Casey Cagle, who has generally been against new tax proposals even as the state has struggled to balance its budget, said Monday he hopes this can be avoided. The Legislature was able to pull it out of Perdue’s budget last year, offsetting it with cuts and aided by federal stimulus funds.

But this year’s budget situation may be even worse than that one, Cagle said. And by accepting stimulus dollars, the state agreed to restrictions on cutting state Medicaid spending.

“There are no guarantees, unfortunately,” Cagle said Monday.

The fight over the new revenue source — which many, including Department of Community Health Director Rhonda Medows, are calling a tax and not a fee — will be a big one. The Democratic Party of Georgia has come out against the proposal. The party has dubbed the proposal “the sick tax” and Chairwoman Jane Kidd called it “fundamentally unjust” last week.

The Georgia Budget and Policy Institute, a budget watchdog group that has been calling for new sources of state revenue for several years now, is backing the proposal. The institute’s executive director issued a statement Monday applauding Perdue for the proposal and saying it will “help avoid crippling cuts to Medicaid.”

The state’s initial report shows 39 hospitals gaining money from the new flow of state dollars. It shows 39 others breaking even on the tax and 84 losing money. Atlanta trauma facility Grady Memorial Hospital would see the biggest impact, gaining about $12.5 million a year.

In Middle Georgia, Coliseum Northside Hospital would lose about $442,000 a year. The Houston Medical Center would lose about $656,000 and Crisp Regional Hospital would lose about $442,000. Peach Regional Hospital and Monroe County Hospital would break even, the state’s report predicts.

The Medical Center would be one of the biggest revenue losers in the state, taking a $7.7 million hit, the projections show. Faulk said the new charge would be passed along, raising bills for people with health insurance.

“The problem is that it eventually boils down to a shrinking section of the population (paying these costs),” Faulk said. “And ultimately that’s the people who have health insurance.”

The Associated Press contributed to this report.

To contact writer Travis Fain, call 361-2702.

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