The "Sick" Tax

By: Brian D. Anderson Sr.
President & CEO
Dalton-Whitfield Chamber of Commerce

The “Sick” Tax

Your Chamber’s Legislative Action Committee kicked off its weekly deliberations this past week. For those of you who have not previously participated in this process, we will have 25-35 people from our member-investors meet every Wednesday from now throughout the legislative session to review legislation, vote on a position to support or not to support the legislation, and to forward our official positions to our legislative delegation. We will also have a conference call with our legislative delegation every other Wednesday.

The session has started with a flurry of activity. Part of the reason for so many pending pieces of legislation so early in the process is due to this being year two of a two year session. So all legislation not acted on last year is automatically eligible for consideration this year. An overview of current legislation under consideration was recently sent to me by the Mathews and Maxwell Agency. According to this legislative summary, there are 61 bills under consideration that are healthcare related.

These 61 bills are divided between four groups: General Healthcare, Pharmaceuticals, Public Health, and Trauma Care. Given limited knowledge of all 61, and limited space to make a few points in this column, I will focus on two primary areas of concern. These two include the Hospital Bed Tax or “Sick” Tax, and the various bills targeted at providing funding for Trauma care.

Governor Perdue included in his 2010-2011 budget a Hospital Bed Tax or “Sick” Tax. The Governor’s proposed tax is to help fill the gap in Medicaid funding that is estimated to be over $500 million. The Governor has offered an alternative to the 1.6% tax on total revenues from the state’s hospitals – a 16% reduction in Medicaid reimbursements from the state.

To my knowledge this recommendation from the Governor has only been through his submission of his budget and an actual bill calling for the tax has not been introduced. Our committee will study the bill (as we do all important legislation) once it is introduced. We will then formally communicate our position once approved by the committee. But suffice it to say, I will be shocked if we do not oppose this type of legislation.

It is easily understood the difficult position that the Governor and the Legislators are in. They have a tough job every year but especially this year given the devastatingly declining revenue trends. The State’s revenue is woefully below projected needs. Medicaid / healthcare costs are skyrocketing and consistently absorb more and more of the state budget. It seems obvious to target raising the revenue from within the budget area needing the money.

But once a 1.6% tax is applied to hospital revenue this year, what will prevent the legislature from increasing this tax to 5% next year. And if this is the most appropriate way to raise the needed revenue, why would the structure of the legislation create winners and losers within the state’s hospitals. For instance, current projections forecast that this legislation will provide a multi-million dollar windfall to Grady Hospital in Atlanta while our local Hamilton Medical and Murray Medical would lose approximately $3 million annually. Good legislation should provide mutually-beneficial results for all affected, not create winners and losers.

And at the end of the day, who pays the hospital bill anyway? We do. The hospitals will simply pass on the tax in increased fees. And those with private insurance will simply pay more through higher charges and insurance premium increases. Isn’t it odd that a republican Governor and a Republican controlled legislature seems to think that indirect taxes like the “sick” tax and those approved through a public referendum such as a transportation sales tax are not tax increases?

The other area of concern in the healthcare arena is funding for trauma care. Let’s just say Georgia is not known for having adequate levels of trauma care. And to increase trauma care in any meaningful way will cost money. This issue received much fanfare last year and will more than likely receive ample attention again this year. The Chamber Legislative Action committee will also be watching this issue as it is debated in the session. Good recommendations are being and have been introduced that will insure Georgians have access to good regional trauma care options. This is a matter of life and death and our state elected officials need to lead by implementing good legislation regarding trauma care.

Although Healthcare reform seems stalled at the federal level, and Georgia officials have much to consider, healthcare will continue to costs a tremendous percentage of all discretionary revenue. Our officials must work together in presenting, debating, and approving the best of all ideas.

Your Chamber of Commerce takes our legislative advocacy mission very seriously. We are grateful that our member-investors participate so enthusiastically in reviewing legislation and making our positions known. If you would like to participate, please contact me or Phyllis Stephens at the Chamber.