TAX PLAN INSPIRED BY MEDICAID COST

                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: SUNDAY, January 12, 1992                   TAG: 9201120226
SECTION: VIRGINIA                    PAGE: D4   EDITION: METRO 
SOURCE: TOM HOLDEN LANDMARK NEWS SERVICE
DATELINE:                                 LENGTH: Medium
TAX PLAN INSPIRED BY MEDICAID COST
Driving the Wilder administration's plan to put new taxes on doctors, hospitals, nursing homes and pharmacists is a threefold increase over the last decade in the state's tab for providing health insurance to the poor.
That Medicaid program now costs more than $1.5 billion annually and covers 428,000 people, including about 200,000 children. Only aid to local public schools, at roughly $2.5 billion annually, is more expensive.
The meteoric rise in Medicaid expenses was created by a variety of forces, including recession-driven growth in the number of poor people, new federal mandates that require Virginia to provide additional services, and medical inflation that runs at twice the consumer price index.
There also has been an increase of 7,000 nursing home beds in Virginia since 1987, with 70 percent of them filled by patients eligible for Medicaid.
"Even though [Medicaid] is essentially funded 50 percent federal money and 50 percent state money, Congress makes 99 percent of the rules, so the states are given little flexibility on who they cover and how much," said Bruce Kozlowski, director of Virginia Medicaid.
Over the past 12 years, the number of Virginians eligible for coverage has risen 36 percent, even though Virginia's program has some of the country's toughest restrictions. In general, only those with monthly incomes of $407 or less qualify for coverage and the Old Dominion ranks 41st among the states in Medicaid payments per capita.
The administration plan calls for a 0.8 percent levy on hospitals' total receipts, exempting their Medicare, Medicaid and charity caseloads. For nursing homes, the rate would be 1 percent; for pharmacists 0.5 percent. Doctors, regardless of the size of their practices, would be required to pay $200 per year.
The levies would generate $68 million over the two-year period beginning July 1, less than one-fourth of the projected increase in Medicaid expenses for that period.
"Someone must think there is a big treasure chest out there and it's like an artesian well, and it keeps bubbling money," said Kozlowski. "In the end, the money must be generated by people."

by Archana Subramaniam by CNB