Pennsylvania's overdue budget included smaller cuts to hospital revenue than proposed, but redirected existing taxes and fees into the state's $27.8 billion general fund from healthcare funds and added a Medicaid managed-care tax.
The Hospital and Healthsystem Association of Pennsylvania said the 2009-10 budget, signed by Gov. Ed Rendell late last week, scaled back $280 million in proposed cuts to state and federal hospital revenue for trauma and burn centers, academic medical centers, critical-access hospitals, medical education, community-access funds and disproportionate-share hospitals to $40.7 million, a 12% reduction from the prior year's budget.
Roughly $215 million in revenue from cigarette taxes and motor vehicle surcharges that previously funded medical malpractice subsidies was shifted to the state's general fund, according to the HHAP and the Pennsylvania Medical Society. The budget also transferred $708 million from the Health Care Provider Retention Account, which helped offset medical-malpractice costs, and $100 million from Mcare, the state's medical liability fund which will continue to be funded by premiums paid by hospitals and physicians. The newly adopted managed-care tax is expected to generate $528.5 million, according to the Pennsylvania Budget and Policy Center, an independent policy research group.