'Sick tax' would break economy, officials say

'Sick tax' would break economy, officials say

February 26th, 2010 in News

By Ashley Speagle


ATLANTA -- Health experts say proposed provider fees on hospitals would force some providers out of business, cost thousands of jobs and stall economic development in those communities.

"Public health is critical to the well-being of our state," Russ Toal, of the Georgia Public Health Association, told state lawmakers Thursday during a budget hearing on health care.

"Almost 40 percent of public health positions across the state are vacant and, with reductions in fiscal year 2011, more staff will be let go," Mr. Toal said.

Lawmakers listened but said little during the three-hour hearing of a joint House and Senate appropriations subcommittee.

Many speakers opposed the so-called "bed tax" or "sick tax," a proposed 1.6 percent fee for hospitals and health insurance providers.

The fees would help the Legislature cover a $300 million shortfall for Medicaid in the fiscal 2011 budget and a $700 million shortfall in fiscal 2012, according to the Georgia Budget and Policy Institute.

Georgia's declining tax revenue and loss of federal stimulus and other one-time funds contribute to the shortfalls.

Lawmakers rejected a similar fee last session. If they do the same thing this year, Gov. Sonny Perdue has proposed a 16.5 percent Medicaid cut to all health care providers.

Carie Summers, of the Georgia Hospital Association, said the 16.5 percent cut would cost hospitals more than $350 million. She said such a cut could force health-care providers to eliminate nearly 22,000 jobs across the state.

"Communities lose an economic engine and future economic development," Ms. Summers said.

Jimmy Lewis of Hometown Health, an organization of rural and small hospitals, pegged the job loss at nearly 17,000 and said as many as 20 rural hospitals could be forced to close.

"In those 20 counties, we would disrupt the access to health care," Mr. Lewis said. "We would create a tremendous economic devastation to all of rural Georgia."

The dental industry, which provides health care to Medicaid recipients, also would be affected, Georgia Dental Association Executive Director Martha Phillips said.


* $77 million: Loss to hospitals under a 1.6 percent hospital provider fee

* $365 million: Loss to hospitals under a 16.5 percent rate cut in Medicaid to all health care providers

* $1 billion: Shortfall in Medicaid funding for fiscal 2011 and 2012

Source: Governor's Office of Planning and Budget, Georgia Budget and Policy Institute

"If dentists receive another fee cut, oral health care will be affected, and many small towns will lose access to oral health care," she said.

In addition to job losses, Ms. Summers said the fees and rate cuts would force hospitals to cover expenses by raising prices to families and businesses. She estimated that costs for insured families would go up by an estimated $700 per year.

Health care representatives are pushing for a 1 percent increase in the tobacco tax as an alternative funding source for Medicaid, but legislators and experts agreed that such an increase wouldn't be enough.

"This tax would not cover all the Medicaid deficit, and I agree there have to be other streams to fill the gap," said Cynthia Mercer, president of the Georgia Obstetrical and Gynecological Society.