Government officials in Louisiana and Texas are considering new taxes on hospitals to help shore up their Medicaid programs, according to industry executives.
The discussions in both states are preliminary but are far enough along to have caught the attention of both the Louisiana Hospital Association and the Texas Hospital Association. The LHA is strongly opposed to the hospital tax under consideration, while the THA is waiting to take a stand until an actual proposal is unveiled, association officials said.
Like many other states, Louisiana and Texas are looking for additional ways to fund their Medicaid programs, and enacting such a tax would not be unusual, said Steve Scheer, a principal with Health Management Associates, a consultancy. By Scheer's accounting, there are 17 states with a hospital tax of some sort and more than 30 with a tax on nursing homes.
The Louisiana Hospital Association is not on board with the kind of tax on the state's nonpublic hospitals that Gov. Kathleen Babineaux Blanco has proposed, said John Matessino, president and chief executive officer of the LHA. "They were hoping to whack $100 million out of the hospitals," he said. "I'm sorry, that's a little bit absurd to think in that direction."
Matessino said the LHA tried to cooperate with Blanco's administration to help the state with its funding of Louisiana's public "charity" hospitals, some of which are in very bad financial shape thanks to a budget crunch. "Medicaid has got tremendous holes in it this year," while the state's budget is a mess, he said.
But trying to preserve the tax money exclusively for the hospitals was proving to be difficult, and the hospital association and governor's office were unable to come together on a plan.
Blanco's 2006 budget proposal, released March 11, settled on a hospital provider fee that would collect $75 million from nonrural hospitals and those not owned by the state. No legislation has been introduced on the matter.
In Texas, state House bill writers are giving some consideration to a hospital tax too, although no bill has yet been introduced, said THA spokeswoman Amanda Engler. The THA did not have details on how the proposed tax might be structured and couldn't comment on it, she said.
Scheer said he was unaware of Texas' interest in taxing hospitals but it didn't surprise him. More states are turning to hospital taxes as a means of shoring up Medicaid programs, which benefit the hospitals.
A hospital tax that supports Medicaid can increase the state's contribution to the program, which leads to a larger federal match for the state's program and results in additional dollars coming back to hospitals, he said.
Some states turn to a hospital tax either to keep their Medicaid eligibility requirements from being tightened-as Oregon did last year-or to expand Medicaid eligibility, Scheer said. Any new state hospital taxes would require approval from the CMS, according to the LHA.