February 6, 2013

Our Leaders Should Be Honest About This Tax

Capitol Impact

Those who report on the activities of Georgia’s legislators concentrate on criticizing the things we think our elected officials are doing wrong. It’s only fair to give lawmakers credit when they do something right, as they did last week in voting to extend the Medicaid provider fee that is also known as a bed tax.

This tax has been levied on hospitals since 2010 and enables the state to bring in about $430 million a year in federal matching funds to help pay for Medicaid, the program that provides healthcare services for low-income people who cannot afford health insurance. Without this tax, legislators would have to cut spending in other areas of the budget to make up for the revenue shortfall. Those cuts most likely would affect K-12 education, where state formula funding has already been reduced by nearly $6 billion over the past decade. The other alternative would be to cut Medicaid payments to hospitals and doctors by 20 percent or more—a decision that might force 10 or 15 financially ailing hospitals in rural areas to shut down.

Gov. Nathan Deal and the legislative leadership worked strenuously behind the scenes to persuade their conservative colleagues of the need to renew this tax levy for another four years.  

“It goes without saying that our hospitals are economic drivers in our communities,” said Rep. Terry England (R-Auburn) as the bill was debated on the House floor. “If you want to keep your local hospitals in business… you need to put a green light on this board today.”
Failure to renew the fee “would have a devastating impact on Grady Hospital as well as all hospitals that take care of indigent patients,” House Majority Whip Edward Lindsey (R-Atlanta) said.  “We all know that we have to have it.”
The bill passed by healthy, bipartisan margins in both the Senate and the House of Representatives as it made its way to Deal’s desk. It was one of those instances where Republicans and Democrats were able to agree on a course of action that really will benefit all of their constituents.

The debate over this Medicaid bill also highlighted one of the unfortunate weaknesses in our current political system: the unwillingness of elected officials to be honest about what they do. What the General Assembly passed was clearly a tax bill. It requires all hospitals to remit 1.45 percent of their net patient revenues to the state each year. No one was willing to admit that, however. When I asked the spokesman for Lt. Gov. Casey Cagle about the scheduling of a Senate vote on the hospital bed tax, he quickly corrected me: “There is no hospital bed tax.”

During an interview with a reporter, House Speaker David Ralston similarly denied that the measure was a tax and called it a “Medicaid assessment fee.” Deal referred to it as a “provider fee.” Sen. David Shafer (R-Duluth), the new president pro tem of the Senate, described it as a “financing plan.”

The bill renewing the Medicaid tax also transferred the responsibility for imposing the levy from the General Assembly to the state Board of Community Health. That way, legislators could implement a tax increase without technically voting for it.

It’s a situation where everyone knows the state needs the tax revenues, but many lawmakers will not admit it, because they’re afraid that a future campaign opponent will accuse them of voting for a “job-killing tax increase.”

“It’s somewhat of an indictment of the General Assembly’s willingness to do its job,” said Rep. Brian Thomas (D-Lilburn), who voted to pass the hospital tax. “It shows a lack of courage on our part. We didn’t get elected to play dodge ball. We’re here to make decisions.”

Tom Crawford is the editor of Georgia Report, an Internet news service that reports on politics and government in Georgia.