Efforts to repeal a soft-drink tax, if successful, will devastate the Arkansas Medicaid program, hospitals said.
They and other providers are scrambling to convince voters that the tax is essential before the Nov. 8 general elections, when a referendum to continue it will be considered.
In a special session in December 1992, the Arkansas Legislature enacted provider taxes on nursing homes and "nonessential" items such as soft-drink syrup, fur storage and pool cleaning to help fund its Medicaid program.
The soft-drink tax, equal to about 2 cents per 12-ounce drink, raised $36 million in fiscal 1994, which ended June 30. With federal matching funds, it made up $138 million of the state's $1.2 billion Medicaid budget. The other taxes drew $202 million with matching funds.
"We're in good shape for the first time in six years," said Ray Hanley, head of the Arkansas Medicaid program. "We have no deficit; we haven't reduced services."
Providers and other supporters of the tax have formed the Committee to Preserve the Medicaid Trust Fund, which will launch radio and television advertisements soon, said Sherry Walker, its chairman. Its efforts are funded by $80,000 from the Arkansas Hospital Association and $135,000 from other groups, Ms. Walker said.
"We're concerned that if the state loses this money, they may look to a provider tax," said Jim Teeter, president of the hospital association.
Citizens Against Unfair Taxes, a Little Rock, Ark.-based group bankrolled by the soft-drink industry, is spending millions to rescind the tax, providers said. It gathered more than 118,000 signatures to place the referendum on the Nov. 8 ballot. Its representatives didn't return several telephone calls from MODERN HEALTHCARE.