Georgia’s governor and legislative leaders hope to quickly extend an annual tax on hospitals that covers a large share of state health care expenses when lawmakers return to the Capitol in January.
The quarterly charges, disparaged by opponents in the past as a “bed tax,” are set to expire on June 30. The state’s Medicaid budget could lose more than $880 million if lawmakers don’t renew the program.
The fees first adopted in 2010 are a percentage of Georgia hospitals’ net patient revenue and also allow Georgia’s Medicaid program to draw millions more in federal support for treating low-income residents. The tax yielded more than $280 million from hospitals and nearly $600 million in matching federal support.
Sen. Butch Miller, R-Gainesville, said renewing the fee is vital to avoid exacerbating what he called an “absolute disaster in rural health care.”
“Hospitals are closing all over the state,” Miller said. “And people are having to drive counties and counties away to get health care.”
Hospitals that see high numbers of low-income patients get the money back through a higher payment rate from the Medicaid program.
Gov. Nathan Deal and legislative leaders have said extending the tax and securing those federal dollars are among their top priorities.
“Northeast Georgia Health System supports renewal of the hospital provider fee that provides for an additional 11.88 percent reimbursement for our Medicaid patients, which helps get us closer to the actual cost of providing care for these patients,” NGHS spokeswoman Melissa Tymchuk wrote in an email.
Rep. Emory Dunahoo, R-Gillsville, said he plans to vote for the measure because it’s a “needed part of the hospital system as it’s set up now,” but he considers it a “Band-Aid” on a larger problem that could be fixed with his Georgia Fair Tax proposal that would change the tax system. He said that would be preferable to having to re-approve this tax every few years.
A spokesman for Lt. Gov. Casey Cagle said recently that the Republican will “encourage early action.”
“He recognizes the critical role of the provider fee in keeping Georgia’s hospitals and patients healthy,” Cagle spokesman Adam Sweat said. “Inaction is not an option and would put our hospitals, especially those in rural areas, in financial trouble, jeopardizing access to care for Georgians.”
Rep. Lee Hawkins, R-Gainesville, said he supports the tax because it “helps hospitals and the state balance the cost of Medicaid.”
Getting a bill to Deal’s desk soon after the session begins on Jan. 9 avoids any political snags, like in 2013 when a national group led by Grover Norquist equated an extension to a tax hike. Republican legislators feared the political implications but didn’t want to lose the funding crucial to hospitals that treat Medicaid patients.
Deal gave lawmakers cover by backing legislation that extended the tax but also charged a state board that sets health care policy with establishing the specific amounts hospitals must pay. Health care organizations expect Deal to again ask lawmakers to add several years to the program’s expiration date.
So far, Norquist, head of Americans for Tax Reform, and the like haven’t weighed in on the upcoming debate.
“I know legislators hate voting on it, but it’s a deal where we feel like they have to,” said Monty Veazey, president of the Georgia Alliance of Community Hospitals. “It makes up for a big shortfall.”
The Georgia Hospital Association also supports extending the system, President Earl Rogers said.
Rep. Terry England, R-Auburn, who chairs the House budget-writing committee, said the setup is particularly helpful for hospitals that treat many low-income patients. England acknowledged that some hospitals do pay more in taxes than they get back from Medicaid, but he echoed providers’ warnings that some hospitals would shut down without the millions of federal dollars drawn by the system.
“Some hospitals seeing a high volume of indigent patients would have to close their doors if not for this,” England said. “Other bigger hospitals are not seeing a large number of indigent patients. But if safety net hospitals disappear, those people are going to the next hospital they can reach.”