Hospital Reps Hammer Proposed ‘Bed Tax'

By Craig Schneider
The Atlanta Journal-Constitution
Georgia Politics
February 17, 2010

Hospital officials turned out in force at the state Capitol on Wednesday to oppose Gov. Sonny Perdue's proposed hospital tax, saying they preferred a tobacco tax to fill a massive Medicaid shortfall.

Some 250 people -- hospital CEOs, Chamber of Commerce officials and lobbyists for doctors, radiologists and dentists -- attended a legislative public hearing on the governor's proposal to fill a $608 million funding gap in Medicaid in the fiscal 2011 state budget. Voices opposing the hospital tax dominated the hearing.

They called it a "sick tax" and a "bed tax." They called it lots of nasty names, asserting that the 1.6 percent tax on patient revenues could increase health care costs, prompt job losses and postpone hospital improvements.

"This is not a small tax," said Kirk Wilson, CEO of St. Joseph's Hospital in Sandy Springs.

Opponents said the tax would take millions from Georgia hospitals, many of which are struggling to make ends meet.

Rep. Jim Cole (R-Forsyth), one of the governor's floor leaders, laid out the bill that would enable the hospital tax. He made clear that while the governor supported House Bill 307 , he was "open to discussion" on alternatives.

The 1.6 percent tax on patient revenues is the most controversial piece of a package of proposals the governor has floated to cover the Medicaid gap. He has also proposed a 1.6 percent tax on the premium revenues of managed care insurers. Together, they would raise about $300 million.

Perdue has also proposed a 1.9 percent cut in the rate used to pay many physicians through Medicaid.

The tax on insurers also came under fire.

"This will exacerbate the problem of the uninsured," said Brad Borum, manager of government relations for insurer Kaiser Permanente.

He said the insurance industry would pass on these increased costs to consumers, leading some employers and people to drop their coverage.

Many who spoke threw their support behind a separate proposal, House Bill 39, that would place a $1 tax on a pack of cigarettes.

The tobacco tax, they said, would provide a steady revenue source as it helps decrease smoking, particularly among the more price-sensitive teenagers.

Both the Perdue proposal and the tobacco tax face some strong opposition. House Speaker David Ralston (R-Blue Ridge) has criticized both, preferring to fill the Medicaid gap through cuts in the state budget.

The Medicaid funding gap is largely due to the reduction of $506 million in money from sources that include the federal stimulus program and the national settlement with tobacco companies.

Perdue has said that if the Legislature fails to find a way to fill the gap, he would push a 16.5 percent cut in Medicaid rates to health care providers across the board.

Several at the public hearing said they feared that plan most of all, asserting it could prompt job losses and health service cuts and even lead some hospitals to shut down.

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© 2010 The Atlanta Journal-Constitution