A controversial proposal to enact a 1.45 percent patient revenue tax on Georgia hospitals for three years was necessary to prevent rural hospitals from closing, according to
Republicans Rep. Matt Ramsey of Peachtree City, who cosponsored the bill, and Sen. Ronnie Chance of Tyrone, who voted for it in the Senate.
The bill has fractured GOP leadership in the Senate, with at least two senators either losing or resigning their positions within the Republican caucus because of their opposition to the bill, which is being pushed by Gov. Sonny Perdue.
The hospital tax revenue would go solely to the state’s Medicaid fund for indigent medical care and would not be spent on other state programs, Ramsey said.
The bill, if it becomes law, would mean that instead of losing $300 million in state budget cuts, the hospitals would only lose about $55 million due to federal matching funds, Ramsey said.
“This is the right thing to do,” Ramsey said Tuesday. “If anyone believes, and I don’t, that this will be passed through to consumers, do you want $300 million passed onto consumers or put this three-year mechanism in place?”
In the Senate, the bill had political casualties. Republican Majority Whip Mitch Seabaugh resigned his position after fellow caucus members “took exception” with his vote against the bill.
In an email to The Citizen, Seabaugh said he voted against the bill “in representing the best interests of my constituents.”
Seabaugh formerly represented Peachtree City and part of western Fayette, though he now represents all of Coweta and parts of three other counties.
Ramsey said he would not support a broad-based tax increase on Georgia citizens who are trying to recover from the poor economy.
Sen. Chance, who voted for the bill in the Senate, bristled at being accused of voting for a tax increase.
“We added an amendment to insure this bill was a tax cut, not a tax increase,” Chance said, referring to a future cut in the state’s insurance premium tax.
Chance said the hospital tax would expire after three years if the law was enacted.
Ramsey said he strongly supports the Senate amendment for the insurance premium tax.
“Hospitals in rural areas were saying: ‘We’re at a breaking point,’” Ramsey said, referring to the state’s previous cuts in Medicaid payments due to the economy.
Chance said the General Assembly was told that without the hospital tax preventing the huge cut in Medicaid provider payments, “at least 30 hospitals would be shut down.”
“Without this, those smaller market hospitals will be out of business,” Chance said.
Ramsey said he doesn’t think patients will have the tax passed onto them because hospitals are locked into multi-year contracts with insurance providers.
“This is not a fee that is imposed directly on patients or an add-on fee that patients will see directly on their hospital bill,” Ramsey said.
House Bill 307 was previously approved by the House of Representatives and is now back up for House consideration after the Senate amended the bill to include a future tax break for insurance companies from state insurance premium taxes. That exemption would only be applied the year after the state’s revenue shortfall fund reserve reaches $500 million or more.
House leaders have objected to the Senate changes in the bill. It’s possible the House could vote down the amendment and re-send HB 307 in its original form back to the Senate for a vote, Chance said.
If that were to happen, Chance said he is not sure if there are enough votes in the Senate for the bill to pass without the insurance premium tax exemption.