March 13, 2010

Georgia’s budget mess could hurt local health care

DALTON — Some plans to deal with the state’s growing budget deficit could take a big bite out of Georgia’s health care system, say local doctors and hospital officials.

The state government faces a $1 billion and growing deficit in fiscal year 2011, which starts on July 1, 2010, more than half of that is estimated to be a shortfall in Medicaid, the joint state and federal program which provides health coverage for low income residents.

Lawmakers are considering several ways to deal with the gap. Among them:

• A 10.25 percent cut in Medicaid reimbursements to doctors, hospitals and other health care providers.

• A $1-a-pack increase in the state’s cigarette tax.

• Removing the sales-tax exemption on non-profit hospitals.

• Remove the state sales tax exemption on groceries.

Jeff Myers, CEO of Hamilton Health Care System, said that Hamilton already loses money treating Medicaid patients because payments don’t cover costs and cutting the reimbursement would just increase its losses.

“In 2009, treating Medicaid patients actually cost us $5 million,” he said. “If you combine charity care, uncompensated cost of Medicaid and bad debt right, those three items were right at $25 million last year.”

Hamilton has about $250 million in annual patient revenues, and Medicaid patients account for about 22 percent of all its patients.

Dalton Dr. John Antalis said many doctors already limit the number of Medicaid patients they treat.

“They can’t afford to see them. If you cut another 10.25 percent, you are just going to exacerbate the problem,” he said. “From  my view as a family physician, I’m going to have a hard time referring the Medicaid patients I see to specialists because of their inability to take care of them.”

Antalis, who serves on the board of the Whitfield County Health Department, says cuts in reimbursement rates also would hurt the health department’s budget, affecting its ability to treat low-income children and others.

Local health care providers said an increase in the tobacco tax would be a better way of dealing with the budget crunch.

“Georgia has a low tobacco tax compared to a lot of states, and tobacco-related illnesses are a big factor relating to the costs of care,” Myers said.

According to the nonprofit Tax Foundation, Georgia’s tobacco tax is currently 37 cents a pack. By comparison, the cigarette tax is $1.34 a pack in Florida, 62 cents in Tennessee, 45 cents in North Carolina, 42.5 cents in Alabama and 7 cents a pack in South Carolina.

State Sen. Don Thomas, R-Dalton, chairs the Senate Health and Human Services Committee and he says all options are still on the table but the tobacco tax increase is the one most likely to pass.

“We don’t want any new taxes, but we have to operate some of these programs. I would say the tobacco tax has an excellent chance of getting through,” Thomas said. “I don’t agree with (the hospital) tax. I’m in support of the tobacco tax if we have to do it.”

Thomas, a physician, was the author of Georgia’s law banning smoking in most buildings open to the public.

Proponents say cigarette tax increases could bring in some $354 million in annual revenue.

State Rep. Roger Williams, R-Dalton, serves on the House Ways and Means Committee, that chamber’s tax-writing body, and he says he’s starting to see support for an increase in the cigarette tax.

“Of course, the revenue from cigarette taxes last month was down 20 percent. If they are not buying at the rate they are now, what’s going to happen if they put another dollar on it?” he said. “I’m going to look at it. I’m leaning toward (supporting) it.”

Dalton-Whitfield County Chamber of Commerce president Brian Anderson said he isn’t sure what impact an increase in the cigarette tax would have on Whitfield County.

“I’m typically not in favor of these taxes that target just a certain group of people. In this case there are some data that show having the appropriate level of tax on cigarettes, which are a known health risk, could be used to offset the costs of tobacco use,” he said. “The problem with that is the state has not shown good restraint or good judgment in that when they do raise special taxes, such as the last tobacco tax increase, the revenue stream isn’t applied to the issue they are supposed to. They just lump it into the general budget.”

Williams said he doesn’t think a proposal to allow state sales taxes on groceries “has much traction.”

“That’s going to hurt the folks who buy groceries, especially the lower-income people. We don’t need to think about that right now,” Williams said.

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