Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, January 30, 1992 TAG: 9201300302
SECTION: VIRGINIA PAGE: B-4 EDITION: METRO
SOURCE: CHARLES HITE MEDICAL WRITER
DATELINE: LENGTH: Medium
WILDER PRESSES FOR HOSPITAL TAX
Virginia hospitals won't have any problem paying a proposed tax to generate $60 million for the state's runaway Medicaid program, Gov. Douglas Wilder said Wednesday."They're not really concerned about the money," Wilder said of the more than 130 hospitals that would be subject to the Medicaid tax.
What really bothers hospital officials is that the tax is permanent and that it can't be passed on to consumers, Wilder said. A provision of the proposed tax requires hospitals to pay for it by cutting costs or reducing profits.
Wilder has crisscrossed the state the past two weeks visiting newspaper editorial boards to drum up support for his Medicaid tax, which has emerged as one of the biggest battles in this year's General Assembly session. The governor flew to newspapers in Bristol and Roanoke on Wednesday.
The Medicaid program has been the largest factor in the growth of the state budget. By 1994 the Medicaid program in Virginia will cost $1.9 billion, nearly double what it cost in 1990. Wilder's tax would generate $60 million in state funds for Medicaid over the next two-year budget. That money would be matched by the federal government, resulting in $120 million to help pay for a $743 million increase in Medicaid for 1992-1994.
Early this winter, Wilder said, hospital officials rejected overtures from his administration to work out a compromise on raising funds for the Medicaid budget. "We asked the hospitals what they could do and they said, `Nothing.' They wanted us to raise everyone's taxes," the governor said.
A general tax increase isn't necessary to help pay for growth in the Medicaid budget, Wilder said. It is more appropriate to ask hospitals and nursing homes to bear an extra burden because more than half of their revenues come from public tax dollars, he said.
"We've been helping the state Medicaid program out since 1982," Laurens Sartoris, president of the Virginia Hospital Association, said in response to Wilder's remarks.
For 10 years, Sartoris said, hospitals lost more than $300 million because the state Medicaid program revised the way it calculated hospital fees. After a five-year court battle, the hospitals and state negotiated a new payment schedule in late 1990. The effect of Wilder's tax, Sartoris said, is to wipe out the Medicaid fee increases that are called for in the settlement.
While Wilder claims hospitals easily can absorb the tax by trimming operating expenses by a half a percent, Sartoris has a different way of measuring the impact. As a whole, hospital profits would be cut more than 11 percent, Sartoris said.
Six hospitals in the Carilion Health System, the parent company of Roanoke Memorial, Community and Radford Community hospitals, would have to pay close to $2 million, or more than 13 percent of profits, officials said.
"This is a Band-Aid on a massive hemorrhage," Carilion President Thomas Robertson said of Wilder's proposed tax. "It's not addressing the root problem of rising health care costs. We need to reform the entire system."
Lewis-Gale Hospital in Salem would pay approximately $458,000 or nearly 20 percent of its 1991 profits. Hospital President Karl Miller said Wilder's proposal was "naive" and showed "a lack of insight into the health care system."
In his remarks Wednesday, Wilder questioned whether the approximately 75 tax-exempt hospitals in Virginia need all the profits they have generated. "We want them to make money," the governor said, but he wondered how much profit was necessary to maintain equipment, fund building programs and pay salaries.