Republican Gov. Haley Barbour said Tuesday he’s puzzled why the House Democratic leadership is against a tax that amounts to less than one percent of a hospital’s gross revenue but brings six times that amount in federal funds back to the medical centers.
The governor said in a meeting with the Sun Herald on Tuesday that if the House fails to act on the tax, he’ll likely cut $34.5 million a month from the program, which provides health care for about one in four Mississippians. Barbour says he’s bound by the state Constitution to balance the budget.
Prior to the change mandated by the federal government, Mississippi taxpayers were essentially footing more of the bill for matching federal dollars, Barbour said. Hospitals, for every dollar put up, were receiving $12 back from Medicaid. Barbour says that under his tax increase proposal, hospitals would still get $6 back for every $1 they spend.
To date, the price tag for the ongoing special legislative session to deal with Medicaid has easily eclipsed $500,000 and continues to grow. But Barbour said he doesn’t know what the holdup is, as the Mississippi Hospital Association has endorsed the hospital tax plan he supports, which includes lucrative reimbursements for the hospitals.
Senate Bill 2013, sponsored by Public Health and Welfare Chairman Sen. Hob Bryan, D-Amory, and Sen. Terry Burton, R-Newton, would raise the tax on hospitals to just over one half of a percent of their gross revenues. It passed the Senate in May in a 41-7 bipartisan Senate vote, but so far has not been taken up by the Democratic House leadership.
Barbour said hospitals will put up a total of just over $200 million, but will be paid back about $1.2 billion, under federal rules.
“When you understand that the hospitals get back six dollars for every one they pay in, you understand why the hospitals have asked for this,” Barbour said. “This is the hospitals’ plan.”
Calling a hospital tax “reprehensible” in a conference call with the Sun Herald on Tuesday, House Speaker Billy McCoy said House Democrats have offered a lower hospital tax and a cigarette tax to fund the shortfall. He says so far, Barbour has not shown any signs of compromising.
“The House has already defeated the governor’s plan,” McCoy said. “We feel like we can pass the compromise… We’ve worked toward compromise, we understand compromise. The governor does not.”
However, the House leadership has also not been able to pass a cigarette tax increase in its recent tries, with its Republican minority blocking them. McCoy said this would change if the Senate and/or Barbour would agree to compromise.
Republicans, including Barbour, acknowledge cigarette tax increases, which are popular in most polls, are almost certain, as a tax study commission appointed by Barbour is evaluating changes to the entire tax structure. The group is expected to recommend increases to tobacco taxes when it releases its findings the end of August. The state cigarette tax is 18 cents per pack, one of the lowest in the nation.
But Barbour said any money from a cigarette tax increase would be better spent on other health programs, not “giving hospitals a tax cut, especially when you realize that they get back $6 for every $1 they spend.”
Barbour noted that the House leadership, which has tried, unsuccessfully, for years to raise cigarette taxes, has proposed “19 different purposes other than Medicaid” on which money from a cigarette tax increase could be spent.
McCoy responded, “That’s true, and this is another one – there couldn’t be a better use for that money than this.”
The Associated Press reported late last week that Senate leadership, including Republican Lt. Gov. Phil Bryant, offered a 50-cents per pack increase to be passed during the 2009 legislative session, if the House would agree to pass the hospital tax and agree to a state income tax cut. Republicans would also ask that the money be spent on some health programs, including funding more school nurses and others.
House leaders rejected the plan. House Medicaid Chairman Dirk Dedeaux, D-Sellers, said Monday the Senate-Barbour plan would tax hospitals the same amount as has been proposed all along, but would create a second tax for cigarettes that would fund an income tax cut.