In Georgia, a $506 million gap in Medicaid prompts calls for new hospital fee

Ga. faces $506M Medicaid gap; hospital fee mulled

ATLANTA — Facing a massive gap in Medicaid funding, Georgia’s top health official on Thursday urged state legislators to adopt a tax hike on hospitals and health care plans.

The state is staring down a $506 million shortfall in Medicaid funds for the fiscal year that begins July 1, according to state Health Commissioner Rhonda Medows.

The recession has caused enrollment in the health program for the needy to soar. Medicaid rolls for low-income residents have jumped 7.7 percent from June 2009 to 2010 to more than 1 million people.

Meanwhile, hundreds of millions of dollars in federal stimulus money are about to dry up.

The state has few options. To participate in Medicaid, it must provide services to the aged, blind, disabled and low-income children. And because Georgia accepted stimulus cash from Washington it cannot cut back eligibility on optional programs such as dental coverage and prescription drugs, Medows said.

“We are in a box,” Medows told a joint budget panel of state legislators on Thursday.

“I cannot find $506 million to fill that hole through cuts, program reductions, layoffs.”

Gov. Sonny Perdue has put forward a proposal which would charge hospitals and health insurance plans a 1.6 percent fee on their total revenues.

The Republican governor has been careful to label it a fee but Medows called it a tax on Thursday, a word that’s not popular in the GOP-led state Legislature.

It’s the second year Perdue has pushed the proposal, which would leverage additional federal matching dollars. Last year the plan died amid opposition from conservative Republicans. But federal money also came to the rescue. This year, unless Congress approves another infusion of federal cash, Georgia will be left to fend for itself.

State Rep. Mickey Channell, who oversees health spending on the House Appropriations Committee, said legislators are looking at possible alternative to Perdue’s so-called bed tax.

“The need additional revenue is real,” the Greensboro Republican said. “Our options are all pretty painful.”

Channell did not elaborate but one alternative in the past has been an increase in the tax on tobacco products.

Federal and state governments share the costs for Medicaid, the health program for needy residents.

Medicaid spending accounts for 9.8 percent of all state general revenue spending in Georgia.

The recession has placed is straining social service programs at the same time state coffers are running dry.

State Human Services Commissioner B.J. Walker told the legislative budget panel on Thursday that over the last two years Georgia has seen a 39 percent jump in demand for social services programs like Medicaid, food stamps and welfare.