July 20, 2008 12:13 am
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BY HOB BRYAN / State Senator
The issue facing the Mississippi Legislature is really very simple. Do we want to continue to collect about $200 million a year from hospitals to help fund the Medicaid program - just as we have done for years - or do we want to reduce those payments by $90 million a year, diverting that money from other priorities such as education, public safety and, indeed, other health care programs?
Ultimately, we also need to increase taxes on tobacco products. But we need to raise those taxes by more than $90 million, we need to include an increase on chewing tobacco and we need to spend the proceeds of those taxes in an effective manner. We don't need to distribute them to hospitals. The logical time to debate those issues is in the 2009 session. There is no connection between the tobacco tax increase and this $90 million problem.
Here's how we got where we are:
For years Mississippi hospitals were assessed about $200 million to help pay for the state's Medicaid program. Then, three years ago, the federal government ruled that the formulate for collecting about $90 million of that was improper. For the past three years, that $90 million has come from Katrina funds and other sources. Now is the time to replace that $90 million with a formula that passes muster with the feds. The hospitals and the Division of Medicaid have agreed on a formula. The Senate passed it overwhelmingly. The House should follow suit.
Why does Mississippi tax hospitals to help with the state's share of the Medicaid program in the first place? Simply put, if Mississippi puts a quarter into the Medicaid program, the federal government provides 75 cents to match it. It's a good deal. Those funds from hospitals allow us to pay hospitals more than we could afford without them. That's why Mississippi and many other states tax hospitals and other providers.
Right now hospitals receive almost $1 billion for services they provide to Medicaid patients. Over and above that, they also receive an additional $250 million from optional programs the state has chosen to operate. These optional programs alone provide more funds to hospitals than the hospitals ever paid in taxes.
Now, suddenly, there is a cry that this hospital assessment is a tax on patients, that it is unfair to hospitals and that it will have all manner of dire consequences. But wait a minute. This is the same system that existed up until three years ago, and no one complained then. No one called these assessments a "patient tax." In fact, most of those who now oppose this assessment supported it until recently. And apparently, they continue to support the other $100 million hospital assessment.
How it was developed
Here's where the proposed formula came from:
The governor had a proposal to raise the $90 million from hospitals, but the hospitals objected to that formula. As an alternative, the hospitals proposed revamping the formula for the entire assessment, including the existing $100 million tax in the new formula.
The proposal, which fixes assessments for five years, has a fee based on the number of patients in each hospital in fiscal year 2006. The formula excludes the patients who are on Medicare, because, as a group, small rural hospitals have a greater percentage of Medicare patients than other hospitals do, and that gives them a break. The formula could have been based on parking spaces, the number of mops owned by each hospital in 2006, or anything else. It's just a formula that fixes the assessment for each hospital for the next five years. There is no connection between this payments and any individual who is a patient in any hospital now or in the future.
In addition to this revenue, the proposal also determines how the money in the optional programs will be distributed. With a handful of exceptions, each hospital gets more money from these revised optional programs than it pays in the hospital tax.
Here's why we need to consider the tobacco tax later:
First of all, for whatever reason, the governor wishes to get a report from his tax study commission before considering a tobacco tax. I'm fairly skeptical about his commission, but the governor has made it clear he will veto any tobacco tax increase prior to the commission's report. Given that the House hasn't even been able to pass a tobacco tax during this special session, it's most unlikely the Legislature could override the governor's veto of a tobacco tax. Therefore, it's just not going to become law.
Second, the tobacco tax proposals being considered let the tobacco companies off too easily. The House doesn't propose to raise taxes on chewing tobacco, which appears to be growing in popularity among young people. Why on earth do we want to let the chewing tobacco folks off without a tax increase?
Third, and most important, the really critical issue is how to spend the revenue from the tobacco tax. If it's to be spent on health care, I think we need to enhance the school nurse program and increase efforts at prevention. We should increase payments to physicians. If Medicaid pays for these programs, we can get a dollar in services for every quarter the state spends. These matters require study and planning, and that's what the Legislature needs to be doing this summer.
Here's where the governor went wrong:
In my opinion, the governor made several errors in the time leading up to this special session. He called the session before the hospital plan was complete. He didn't include House members in developing the plan. He added extraneous matters to the call, with the goal of creating problems for the House leadership.
Also, the governor tried to defeat many House members in last year's elections, and he worked tirelessly against the reelection of Speaker Billy McCoy. Those House members and the speaker are understandably upset with the governor.
Nevertheless, here's what the Legislature needs to do:
This issue has dragged on far too long. I personally have offered numerous alternatives to members of the House in an effort to get things resolved, but each of them has been rejected. It's time to quit worrying about who will be blamed for this impasse and resolve this matter. The voters who send all of us to Jackson deserve a solution that's in the best interest of the taxpayers.
Sen. Hob Bryan, D-Amory, has been in the Mississippi Senate since 1984. He is chairman of the Committee on Public Health. Contact him at wendellbryan@gmail.com, or write to him at P.O. Box 75, Amory, MS 38821. This column originally appeared in the
Northeast Mississippi Daily Journal.
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