JACKSON — When lawmakers return to the state Capitol on May 26 to resume negotiations on a new $5 billion state budget for the fiscal year that begins July 1, they will face the same major decision that’s been on the table for more than six months: Who will pay for the state’s portion of the Medicaid program?
In his revised budget recommendation, Gov. Haley Barbour repeated his call for a $90 million hospital assessment as a bedrock financing method for the state’s portion of the Medicaid program. The federal-state program provides health care for poor children, the blind, the disabled and the elderly.
House Speaker Billy McCoy said flatly that he didn’t “believe the House would pass a hospital tax at $90 million.”
“But I believe we are moving toward a meaningful compromise with the Senate and that we will ultimately be able to craft a good budget,” said McCoy.
But without the $90 million hospital tax, Barbour said the entire Medicaid program will be in danger of historic budget cuts in the midst of a recession.
“If the Legislature passes a budget without reinstating the $90 million hospital assessment in 2010, it will be necessary to cut the total Medicaid budget by $571 million or make cuts to other state agencies and programs,” said Barbour. “Keep in mind that most hospitals are government-owned or non-profits and pay no other taxes. Most pay no income tax, no property tax and no sales tax. I’m only asking the hospitals to pay for their fair share of the cost of caring for Mississippi’s neediest citizens.”
But House Democrats say Barbour is misrepresenting the relationship of Medicaid reimbursement and any hospital assessment or “tax” that might be levied.
“The hospitals perform services for Medicaid patients and these services cost money,” said Rep. Cecil Brown, D-Jackson. “They then submit their bills to the Division of Medicaid, which pays them the Medicaid rate for services, often less than the cost of those services. Medicaid then submits a request for reimbursement from the federal government at our allowable match rate. The difference between the federal match rate and the allowable Medicaid payments to hospitals for services is the state ‘match’ requirement.”
Brown said the governor talking about hospitals paying a “fair share” is a political misdirection.
“Where the state gets its match is irrelevant in the payment process,” said Brown. “We can get it from general funds, taxes on hospitals, cigarette taxes or taxes on anything else. What we cannot do, and what we used to do, is re-circulate the federal money and match federal money with federal money. We already tax the hospitals. They pay a bed tax and a ‘gross revenue assessment.’”
Rep. George Flaggs, D-Vicksburg, said while Barbour has complained about the failure of the House to support his $90 million hospital tax proposal, the House already passed a $45 million hospital assessment and that it’s Republicans in the Senate who have been reluctant to vote to support a hospital tax at any level.
“The House put our cards on the table early in the session,” said Flaggs. Flaggs said the Mississippi Hospital Association has been active in both chambers opposing Barbour’s plan for months.
MHA President Sam Cameron said: “The governor’s budget calls for a $90 million tax on sick people. It amazes us that Gov. Barbour, Lt. Gov. (Phil) Bryant and Sen. Alan Nunnelee think hospitals are the only part of our state’s business community that is immune from the current economic crisis. Hospitals across the state are implementing staff and service reductions daily. They are also anticipating decreased reimbursement rates and increased cost shifting at the federal level. To tax sick people in these economic times is a sign of ‘sickness’ on the part of our governor and the Senate leadership.”
Prior to July 1, 2005, Mississippi’s qualified public hospitals transferred state and local funds to the state Division of Medicaid to be matched 3-to-1 with federal funds as part of a Medicaid finance plan. The public hospitals transferred more than their necessary share to the Division of Medicaid to provide $90 million that was used to draw down $270 million in federal Medicaid matching funds.
Beginning July 1, 2005, the federal government disallowed that financing method. In order to continue to receive the $270 million, the state has to find other means to finance the $90 million that had been matched with public hospital transfers.
It was a financing method that MHA supported and helped to devise, a point that Barbour is fond of making on the political stump but one that Cameron has said is “misleading.”
“MHA did, indeed, devise the intergovernmental transfer model that worked very well for Mississippi for over 15 years,” said Cameron. “That plan, however, was disallowed by the Federal Centers for Medicare and Medicaid Services in 2005. The MHA-designed model was not a taxation model. The current taxation model being proposed by the governor and the Division of Medicaid is not and was never a proposal supported or designed by MHA.”
In the Senate, both Bryant and Nunnelee, R-Tupelo, expressed “hope” that budget negotiations were headed in the right direction.
