Gov. Sonny Perdue’s proposal to levy a 1.6 percent fee on hospitals and insurers is being met with stiff resistance by hospitals, the business community and lawmakers alike.
Perdue is proposing the fee to help overcome a $317 million shortage in the state’s Medicaid funds.
Officials with Northeast Georgia Health System said the fee would cost the hospital system between $8 million and $9 million. “This would be a direct reduction in the hospital’s operating earnings,” said Jim Gardner, chief executive officer of NGHS.
Gardner said the hospital system can’t just raise its charges to make up for the proposed tax.
“By and large, we are price takers, not price makers. The federal government sets Medicare rates; the state legislates Medicaid rates,” Gardner said.
He points to costs for which the hospital system is already footing the bill, including $16 million in charges not reimbursed by the state Medicaid system. In addition, the hospital system provided more than $21 million in charity and indigent care in its last two fiscal years.
The list of opponents to Perdue’s proposed tax is long and getting longer.
Last week, Greater Hall Chamber of Commerce directors added their opposition to that of others, including the Georgia Chamber of Commerce and the Georgia Hospital Association.
“I believe the governor’s proposal has an uphill climb,” said Rep. Carl Rogers, R-Gainesville, who said he has heard from hospital officials and their strong opposition.
The hospital association says one-third of the state’s hospitals are operating in the red. There are predictions that the tax could sound the death knell for some hospitals that are struggling to stay afloat.
Part of the projected shortfall for Medicaid is due to the state losing its ability to levy fees on the three Medicaid managed-care organizations that operate in Georgia. Those fees currently generate about $110 million annually.
Georgia was granted a four-year exemption to portions of the Deficit Reduction Act of 2005. Under the act, to qualify for federal reimbursement, a state’s provider tax would need to apply to both Medicaid and non-Medicaid MCOs.
With the help of U.S. Rep. Nathan Deal, R-Gainesville, Georgia was granted an exemption to that portion of the provider tax law. That exemption expires Oct. 1.
The loss of revenue, which was known to state officials for four years, comes as the state is facing a $2.2 billion budget shortfall in the current year and a tight revenue picture for the next state budget that takes effect in July.
Perdue is not waiting to see if the Obama administration will offer the state aid for Medicaid. A published report said Georgia could get $358 million in federal funds for Medicaid this year and $384 million in 2010.
“There really are some other alternatives,” said Deb Bailey, who represents NGHS at the state Capitol. She said if the preliminary numbers are correct, federal funds would take care of the projected hole in the Medicaid budget.
Rogers said he believes the feds will come through.
In addition, State Rep. Ron Stephens, R-Garden City, has proposed an increase in the state tax on cigarettes that would generate significant revenues for health care.