Georgia Legislators Mull Health Care Fees

By Shannon McCaffrey
Associated Press
Athens Banner-Herald
January 22, 2010

ATLANTA - Facing a massive gap in Medicaid funding, Georgia's top health official urged state legislators Thursday to raise taxes on hospitals and health care plans.

The state is staring down a $506 million shortfall in Medicaid funds for the fiscal year that begins July 1, according to state Health Commissioner Rhonda Medows.

The recession has caused enrollment in the health program for the needy to soar. Medicaid rolls for low-income residents have jumped 7.7 percent since June to more than 1 million people.

Meanwhile, hundreds of millions of dollars in federal stimulus money is about to dry up.

The state has few options. To participate in Medicaid, it must provide services to the aged, blind and disabled and to low-income children. And because Georgia accepted stimulus cash from Washington, it cannot cut back eligibility on optional programs such as dental coverage and prescription drugs, Medows said.

"We are in a box," Medows told a joint budget panel of state legislators Thursday. "I cannot find $506 million to fill that hole through cuts, program reductions, layoffs."

Gov. Sonny Perdue has put forward a proposal that would charge hospitals and health insurance plans a 1.6 percent fee on their total revenues.

Perdue has been careful to label it a fee, but Medows on Thursday called it a tax - a word that's not popular in the Republican-led Georgia General Assembly.

It's the second year Perdue has pushed the proposal, which would leverage additional federal matching dollars. Last year the plan died amid opposition from conservative Republicans. But federal money also came to the rescue.

This year, unless Congress approves another infusion of federal cash, Georgia will be left to fend for itself.

State Rep. Mickey Channell, R-Greensboro, who oversees health spending on the House Appropriations Committee, said legislators are looking at possible alternatives to Perdue's so-called bed tax.

"The need for additional revenue is real," Channell said. "Our options are all pretty painful." Channell did not elaborate on potential alternatives, but one idea raised in the past was to increase the tax on tobacco products.

Federal and state governments share the costs for Medicaid, the health program for needy residents, and Medicaid spending accounts for 9.8 percent of all state general revenue spending in Georgia.

The recession is straining social service programs at the same time state coffers are running dry.

State Human Services Commissioner B.J. Walker told the legislative budget panel Thursday that in the past two years, Georgia has seen a 39 percent jump in demand for social services programs such as Medicaid, food stamps and welfare.

Originally published in the Athens Banner-Herald on Friday, January 22, 2010

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