Debate over hospital tax prolonged in Mississippi

State News

April 1, 2009

Anonymous Picayune Item Wed Apr 01, 2009, 05:48 PM CDT

JACKSON — The Mississippi House and Senate are at odds over how much to tax the state’s hospitals to generate revenue for Medicaid and the overall state budget, and their negotiations will continue over the next few weeks.

House Medicaid Committee Chairman Dirk Dedeaux, D-Perkinston, said lawmakers couldn’t reach an agreement by a legislative deadline. However, he said a bill remains alive that lawmakers could use to add any language related to Medicaid when they return in May or June to consider a state spending plan for the fiscal year that begins July 1.

Dedeaux said the House has proposed a $45 million hospital tax. The Senate has pushed for a $90 million tax, but is willing to consider a lower amount or a tax that’s phased in over time, said Senate Public Health Committee Chairman Hob Bryan, D-Amory.

Reaching a compromise is critical. Lawmakers in both chambers say the hospital tax and a proposed cigarette tax will help a state budget that’s facing declining revenue. Negotiations also continue on the effort to increase the state’s 18-cents-a-pack excise tax on cigarettes.

Bryan said the situation affects the more than 568,000 poor, elderly and disabled people who receive Medicaid benefits.

“A great tragedy is that there are sick people suffering and dying. This is quite literally deadly serious,” Bryan said, referring to patients who could lose care if the state is forced to reduce Medicaid services.

Medicaid provides coverage for hospitalization and doctor visits. It also pays for prescription drugs and nursing home care.

Bryan said the Senate’s plan would revive and restructure a tax hospitals paid for more than a decade, but the Mississippi Hospital Association has fought against restarting the payments. Gov. Haley Barbour wants the hospital tax to resume.

Without a hospital tax, Mississippi’s budget in the coming fiscal year will be short by millions of dollars, said House Appropriations Chairman Johnny Stringer, D-Montrose.

“We need every dime we can get,” Stringer said.

The sentiment was echoed by Senate Appropriations Chairman Alan Nunnelee who warned senators Tuesday that if there’s no deal on the two tax proposals and the state fully funds a formula that pays for public schools, some agencies could be cut up to 20 percent in the coming fiscal year.

Nunnelee said he’s unsure whether the federal stimulus money will be used to restore budget cuts to the Mississippi Adequate Education Program because the state needs clarity on rules and regulations associated with the funding.

“We get changing rules every day,” said Nunnelee, R-Tupelo.

The federal stimulus money, however, will provide some relief within the Medicaid program, which is paid for with federal and state dollars. For every $1 Mississippi pays for Medicaid, the federal government pays nearly $3. Medicaid received nearly $552 million in state funds for the current fiscal year.

Stringer said the federal relief will come in the form of a reduced Mississippi match. He said the state will put up an estimated $184 million less than it would normally have for fiscal year 2009. He said those savings in state dollars will be shifted to plug other holes in the budget.

Medicaid spokesman Francis Rullan said that figure “isn’t set in stone, but is based on our estimate given what we know about the stimulus package at this point.”

Because of declining revenue, lawmakers recently slashed $300 million from the current state budget and $400 million from the projections for next year’s budget.

The bill is Senate Bill 2928.

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