An important factor in the debate will be whether the state should renew the “hospital bed tax” provision which expires next June 30.
The 1.45 percent tax that hospitals pay on net patient revenue was levied by the 2010 General Assembly, under pressure from then-Gov. Sonny Perdue, to prevent a massive Medicaid shortfall. The fee allows the state to get matching federal funds on a 35 state-65 federal ratio. It also helps level the playing field among hospitals since Medicaid doesn’t pay what it costs to treat patients covered by the plan.
The tax has helped Georgia hospitals that have a large number of Medicaid patients, including Tanner Health System, which relies on Medicaid for about 14 percent of its revenue. Loss of the funds could cause extensive service cuts.
“We think renewal of this tax is very important,” said Tanner President/CEO Loy Howard. “We take care of many Medicaid patients, particularly in OB, so we’re in favor of the tax because it allows us to expand Medicaid and keep it at the level it is now. It’s imperative to maintaining access for many citizens, who without that option, would have no healthcare coverage.”
Howard said the tax is already in place and it’s working, so he feels it should be renewed so hospitals can take advantage of available federal dollars to provide coverage for as many people as possible.
“The bed tax is very important, especially considering that the governor is giving indication that he is not in favor of Obamacare Medicaid expansion or health care exchanges,” Howard said. “I’m going to defer to the governor on that call, and I think our legislators share some of the same opinions on Obamacare. Given that’s their position, we think the bed tax is particularly important.”
The state budget is already facing Medicaid shortfalls and the loss of the bed tax funds would be enormous. In fiscal 2011, the state collected $215 million in tax from hospitals, which allowed a “draw down” of another $590 million in federal Medicaid dollars, according to the Georgia Department of Community Health.
The Georgia Hospital Association, which represents hospitals that depend heavily on the bed tax and others that don’t, is currently working on a legislative proposal that would keep all its members happy.
“The current Provider Payment Agreement ends June 30, 2013, and it’s very clear to the Georgia hospital community that a very similar program must be passed by the state Legislature to meet the state’s budget needs and to help hospitals avoid huge cuts in Medicaid rates,” Kevin Bloye, GHA vice-president of public relations, said Thursday. “That’s why GHA is currently in the process of developing a similar payment system that improves upon the present program and mitigates some of the large financial losses that some hospitals in the state are currently incurring.
“This is not a perfect system, by any means,” he said, “but it’s far better than the alternatives, which are huge Medicaid rate cuts and the potential loss of sales tax exemption for not-for-profit hospitals. The overwhelming majority of GHA members support the creation of this new and improved Medicaid funding mechanism. Once the system is approved by the GHA membership, the General Assembly will then have to pass the funding mechanism for it to become law. Needless to say, we have a lot of work to do.”
Georgia legislators who represent Carroll County have indicated they are now in the learning mode on the bed tax renewal and are reserving opinions until they can see legislative details as the debate progresses.
“I don’t have a position at this time,” said District 69 state Rep. Randy Nix, R-LaGrange, who represents a portion of south Carroll County. “I will wait until I get the facts, hear the pros and cons, and see what effect it will have locally and around the state.”
“I honestly don’t have a position on this bill yet,” said District 18 state Rep. Kevin Cooke, R-Carrollton. “I’m holding off on having an opinion until we actually see the legislation. Some have suggested that the bill will simply renew the tax. Others have said it might be offset by a tax cut in another area. Regardless, I will withhold judgment until the bill is official.”
District 28 state Sen. Mike Crane, R-Newnan, commented on the bed tax legislation at length.
“I’m glad the previous Legislature put a sunset clause on the bed tax,” Crane said. “Sunset clauses are very important in that they require us to revisit this tax and open debate on its merits and impacts.
“First, I believe the government needs to improve how we control costs and manage for unpredictability in the revenue stream before we implement new taxes,” he said. “Much of the impending shortfall in the Medicaid sector could have been absorbed by the projected revenue increases we’ve seen this year. Instead, those dollars are committed elsewhere.
“Second, we have to find ways to control the rising cost of health care rather than continue to fuel the cost increases with more tax dollars. We need to put the consumer back in the driver’s seat when it comes to health care. Consumer dollars are the most efficient dollars in the market place. They’re selective, informed and frugal, which leads to a competitive and efficient market. Such a market provides for the best allocation of resources, drives innovation and lowers cost. Tax dollars tend to have the opposite effect on the marketplace.
“It’s a very important issue, and I need to have the most information possible before casting a vote for Georgians,” Crane said. “I’m still researching the best options for our citizens. Renewing the bed tax is just another Band Aid on a much more serious problem. It’s time we did the hard work and find the answers. My goal is to find those answers.”
“It’s very complicated and there’s lots of money at stake,” Howard acknowledged. “There’s hundreds of millions at stake for Georgia and the Medicaid program. I certainly don’t envy the position that the legislators are in, but I think it’s important to have a viable Medicaid program. If there’s federal dollars available to maintain a viable Medicaid program, as a provider, we think it’s important to access those dollars.”
Howard said he fears that failure to renew the bed tax will plunge Medicaid even deeper in the hole.
“I think taking advantage of a program that’s primarily funded by the providers through this bed tax makes good sense,” he said. “It’s a responsible way to fund Medicaid and that’s why we’re such strong advocates of continuing it.”
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