Under the Dome

May 16, 2014

Legislator criticizes McCrory budget for 'sick tax'

Hospitals would have to pay North Carolina more of their cost to treat Medicaid patients in Gov. Pat McCrory's budget proposal.

Rep. Ken Goodman is criticizing Gov. Pat McCrory’s budget for increasing an assessment on hospitals, calling it “a $15 million sick tax.”

In a complicated accounting maneuver set up about three years ago, hospitals have been paying the state a percentage of their cost to treat Medicaid patients in order to get more Medicaid money from the federal government. Medicaid is the government insurance program for poor children, their parents, elderly and disabled people. The state and federal government share the cost, with the federal government paying about two-thirds.

McCrory’s $21 billion budget proposes increasing the amount hospitals send the state by $15 million, adding to the $135 million the hospitals already pay. But though they would kick more money to the state, the hospitals wouldn’t get more back from the federal government.

Goodman, a Richmond County Democrat, said the $15 million extra is essentially a tax increase that will hurt struggling rural hospitals.

“Governor McCrory is a former big city mayor,” Goodman said in a statement.

“I doubt he understands that many rural and suburban hospitals are truly struggling right now, and this is going to further compound their financial woes. It is bad public policy, and it’s sad the Governor would try to put this on the people of North Carolina.”

McCrory's office objected to the idea that the assessment was a "sick tax," because hospitals would be assessed voluntarily and would be able to get money back from the federal government.

"In addition to this assessment being voluntary, North Carolina hospitals will still benefit from this approach to the tune of more than $400 million because it will allow them to continue to receive more federal dollars while strengthening our state's ability to provide services for those in the Medicaid program," a McCrory spokesman said in a statement.

On Wednesday, after McCrory sent presented his budget, the N.C Hospital Association expressed concern about the additional assessment.

"After last year's assessment increase and state funding reductions, hospitals are already paying more than the state's share of the cost of caring for hospitalized Medicaid patients," Hugh Tilson, N.C. Hospital Association executive vice president, said in the statement. "Our community hospitals cannot continue to offset state underpayments for Medicaid and fulfill our role as the health care safety net and our mission to care for any North Carolinian, all day, every day. North Carolina's hospitals look forward to working with the Governor and the legislature as the state budget discussion progresses."

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