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Senate approves $25 million voluntary tax on hospitals

Senate approves $25 million voluntary tax on hospitals

Idaho Freedom Foundation staff
March 25, 2010
Idaho Freedom Foundation staff
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March 25, 2010

Private hospitals are agreeing to pay $25 million in assessments to the state of Idaho in order to ensure federal funding through Medicaid.  The Idaho Senate approved the proposal Thursday, which now heads to the governor.  The $25 million is part of the plan lawmakers used in balancing the state budget.

Idaho Hospital Association President Steve Millard said during a Senate hearing on the legislation that his group of private hospitals supports the assessment.  “It’s a mechanism that’s designed to deal with the Medicaid shortfall during the next two years,” he said.  The assessment will bring in $18 million from hospitals.  Another $7 million will come from settling cost overpayments to the Idaho Department of Health and Welfare (DHW).  The assessments will be used to get federal Medicaid dollars.  The federal government currently covers 79 percent of Idaho’s Medicaid costs.  The measure would also allow hospitals to collect higher rates for Medicaid costs from the federal and state government.

Millard and DHW’s Medicaid Administrator Leslie Clement collaborated on the two-year assessment plan.  “This is a really unique mechanism that Medicaid programs have,” Clement said.  “It doesn’t help solve our huge gap that we have in front of us, but without it we’d be in much worse shape.”  Lawmakers are asking DHW to find $42 million in savings in state Medicaid spending.

Sen. Patti Anne Lodge, R-Huston, called the agreement remarkable.  “This bill is critical to the overall budget of the state,” she said.

House Minority Leader John Rusche, D-Lewison, said Idaho isn’t the only state where hospitals agree to pay voluntary taxes to get federal Medicaid dollars.  “Almost every other state is doing it,” he told IdahoReporter.com.  “The feds really don’t care how we do our tax.”

Rusche, a retired doctor, said that hospitals agree to the assessment because it minimizes the overall reduction they’d see from the reduction in state Medicaid payments.  He said the 79 percent federal match is equivalent to the state paying $1, but hospitals receiving $5.  Under the voluntary assessment, hospitals would now cover the state’s dollar.  “The hospitals are going to put up a buck and get that $5 back,” he said.  “So their net is $4.  So, instead of having a $4 cut, they’ll only have a $1 cut.”

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