FOR IMMEDIATE RELEASE – April 5, 2010

Contact: Sen. Tim Golden, 404-656-7580 or tim.golden@senate.ga.gov

Senate approves 'bed tax' increase on hospitals

By Sen. Tim Golden

The Senate voted 31-15 Thursday to approve Gov. Perdue's proposal for a 1.45 percent "bed tax" increase on Georgia hospitals, a plan that would bring in approximately $169 million in new tax revenue in an effort to offset the state's Medicaid deficit.

The health care community had strongly opposed this tax increase for two years, until a few weeks ago when the governor threatened to take the even more severe actions of reducing Medicaid reimbursements by 10.25 percent and eliminating the sales tax exemption for nonprofit hospitals, even though he could not have done the latter without legislative approval.

The tax will most likely be passed on to patients, particularly those with insurance, and to their employers who provide the insurance. In turn, we might see a reduction in current job levels, a reduction in health care services and a reduction in health care access, particularly in rural areas.

Patients are already dealing with skyrocketing health care costs, and many Georgia hospitals are struggling financially. Neither our hospitals nor their patients can afford a tax increase on health care services.

Under the legislation, critical access hospitals are exempt, but those waivers are very difficult to obtain, which could result in a delay or even a prohibition against pulling down any federal funds anticipated from this tax.

On Thursday, when it appeared HB 307 would not receive the 29 votes needed for approval, its Senate sponsors sweetened the deal by adding an amendment that would repeal the state's insurance premium tax sometime in the future when the state's reserve fund exceeds $500 million. This would reduce state revenues by $75 million to $350 million per year, making the legislation "revenue neutral," and giving Senators who answer to a powerful Washington, D.C., lobbying organization rather than their constituents some political cover.

Although it is difficult to project how severe an effect the bed tax increase will have on hospitals and patients, one analysis that was distributed earlier in the session showed that it would cost hospitals in our district millions of dollars while benefiting some large hospitals in Atlanta. While we do have a Medicaid budget crisis, we have other options to deal with it rather than taxing our struggling hospitals and their patients who are already suffering from illness and the high cost of health care.

HB 307 was to go back to the House of Representatives for consideration of the Senate changes to the legislation. But on Friday, House Speaker David Ralston announced he would rule the Senate amendment as non-germane, sending the issue back to the Senate. "I am disappointed they amended the bill in a way to include a change that is likely unconstitutional and non-germane to the underlying bill. This is not a time to make last minute changes to major legislation by adopting proposals which have not had a thorough discussion."

We will have to deal with this matter after the Easter recess, and work to find a solution to the shortfall in Medicaid funds in the state budget that is so critical to our hospitals and health care providers.

More Senate Action: This week, the Senate approved a number of House bills that now go to the governor for his signature, including:

HB 128, which would exempt disabled veterans and blind persons who operate a business or work in sales from paying occupation taxes, administrative fees or regulatory fees for a 10-year period. Currently, these exemption certificates are required to be renewed annually.

HB 194, which would require pharmacists who substitute a generic drug for a brand-name drug to display the names of both drugs on the prescription label along with an explanation indicating that a substitution has occurred.

HB 905, which is an effort to grant schools more flexibility as they face tremendous budget challenges. The measure would extend until 2015 the sunset date for providing school systems advance funding for new facilities that are needed because of student growth or damage caused by fire or natural disaster.

HB 1023, which would give a small tax credit to businesses that hire unemployed workers. The legislation would also reduce the state capital gains tax by 50 percent if the state has $500 million in reserves.

Easter Recess: The General Assembly is in official recess until Monday, April 12. Only seven legislative days remain in the session, with plenty of unfinished business, including the budget for the remainder of fiscal year 2010 and the annual budget for fiscal year 2011, remaining to be addressed.

Sen. Tim Golden represents District 8 (Brooks, Cook, Lowndes and Thomas counties) in the Georgia State Senate. Contact him at 121-A State Capitol, Atlanta, Ga. 30334; by phone at 404-656-7580 or by e-mail at tim.golden@senate.ga.gov.