News
Georgia lawmakers rail at hospital tax
2/4/2010
Atlanta Business Chronicle - by Dave Williams Staff Writer
Friday, Jan. 23, 2010
Legislative budget writers Friday assailed Gov. Sonny Perdue’s plan to tax hospitals and health insurers to help offset a deficit in Georgia’s Medicaid budget.
The governor is asking the General Assembly for a 1.6 percent fee on hospitals and insurance companies to generate $317 million during fiscal 2010, which starts on July 1.
Hospitals would provide about $260 million of the new revenue, while insurers would kick in about $57 million.
To help reduce the impact on hospitals, Perdue also is proposing a $50 million increase in reimbursements to hospitals that serve Medicaid patients.
That’s not a good tradeoff for hospitals already struggling with the rising costs of health care, said Rep. Mickey Channell, chairman of the House subcommittee with jurisdiction over health spending.
“They come out $210 million in the hole,” Channell, R-Greensboro, said during the third and final day of hearings on Perdue’s budget recommendations. “If this is the state’s notion of helping hospitals, they’d just as soon us not try to help them.”
But Rhonda Medows, the state’s commissioner of community health, said additional revenues are needed to deal with increasing enrollment in Medicaid brought on by the recession.
“The correlation between the unemployment rate and the enrollment rate in Medicaid … cannot be overstated,” she said.
While the eventual impact of growing enrollment remains uncertain, Medows said the state is facing at least a $423 million gap in the Medicaid budget, the result of a $205 million deficit, spending cuts of $113 million recommended by the governor and an upcoming change in federal law that will cost the state $105 million.
“That’s a huge amount of money to think you’re going to achieve it totally with cuts,” Medows told lawmakers.
Insurers are warning that they would pass on the new tax to consumers, a move that could lead more Georgians to drop health insurance coverage and increase the number of insured.
But Medows said the average premium increase would be $4.53 a month, not a significant amount compared to premium hikes that already have occurred within the industry.
