MEDICAID TAX DRAWS CRITICISM IN ILLINOIS

CARBONDALE, Ill. -- Memorial Hospital of Carbondale will benefit from the new Medicaid tax approved by the Illinois legislature last week, but administrator George Maroney is opposed to the measure.

"It's a horrible piece of legislation," Maroney said Saturday.

The $735 million measure will result in hospitals paying 2.5 percent of their adjusted gross revenues to the state. "But, it is an example of politicians being more interested in being elected than doing the job they were elected to do," Maroney said.

He said legislators took a "backdoor attack" to a problem that could have been settled with an increase in the state income tax.

"What this does is put the hospital industry into the position of taxing paying patients," said Maroney. "The hospitals will have to pass on these costs."

Maroney said he felt the legislature was afraid to talk about an increase in income tax.

"This is an election year," said Maroney. "An increase in the income tax would be unpopular with the voters."

All 177 seats in the Illinois legislature are up for grabs in November.

"We (Memorial Hospital) should be a winner in regard to the additional revenue we'll receive," said Maroney. "We have a high rate of Medicaid patients here. We do the bulk of obstetrical care and provide high-risk infant care. We take care of a lot of state patients.

"But, as a hospital administrator, I feel it's not good to tax one portion of the general public to help social programs," added Maroney. "This should be shared by all people, not just those requiring hospital care."

The Illinois legislature approved the Medicaid tax, and a $28.4 billion Illinois state budget late Thursday. The tax passed the House with the minimum amount of votes 71.

Under the tax proposal, nursing homes will pay a $1 per day fee per patient and hospitals will pay 2.5 percent of their adjusted gross revenues. The Medicaid tax was required for the state to receive federal reimbursement for nursing homes and hospitals, said Illinois Gov. Jim Edgar.

The Medicaid tax sets new fees for hospitals and nursing homes, and the money will be used to capture federal funds to provide medical care for the poor. It would take money from facilities that serve few poor patients and shift it to those that do.

Without the tax program, Medicaid reimbursement rates for nursing homes would have dropped about 30 percent, Edgar said. "And, rates for hospitals could have been slashed as much as 40 percent by Sept. 1."

"What the tax amounts to is that we have to pay to participate in the public program," said one Southern Illinois nursing home administrator. "We're not familiar enough with the program at this point to really discuss it. Although it may not be the best thing, it still beats a 30 percent cut in federal benefits."

Sen. Jim Rea didn't vote for the $735 million tax on hospitals and nursing homes this week.

"I just didn't feel comfortable with the proposal," said the 59th District state senator from Christopher. "I had some feedback from rural hospitals that it would create a lot of financial problems for them."

"Some of the hospitals and nursing homes will receive a lot of the money back," said Rea. "But, it would serve a hardship on private-pay institutions."

Also in the bill is a grant program, which would allow even private-pay recipients to receive grant money to help offset the new tax.

Rea said several small rural hospitals had closed in recent years, adding that "usually it's the smaller rural hospitals that wind up closing, leaving a real void in health care. I think we could have worked out a better solution."

One report from Southern Illinois noted that 14 of the area's 30 hospitals would lose money because of the tax, said Rea.

Rep. David Phelps, D-Eldorado, who added his support to the final bill, discussed the measure prior to a final vote Thursday.

"At this point, I don't know how I'll go on the measure," he told a Southeast Missourian reporter. "I withheld my vote the first time the bill came up. I didn't have a complete breakdown on it."

Phelps voted against the measure the second time it came before the House, explaining that "Gov. Edgar and GOP minority leader Lee Daniels were at odds on the proposal at that time."

Daniels of Elmhurst, however, offered his support late Thursday, saying "we have no other choice."

Phelps also supported the final action, explaining that the health tax was "needed to access the $700 million federal reimbursements."

The House vote on the health proposal was 71-44. The House later passed the budget, 74-41, sending it to the governor.

The Senate approved both the tax plan and the budget, leaving it up to House members to resolve the last major issues of the session.

For a second straight year, the budget represented belt-tightening by the state. Only a handful of departments got increases, including a $31 million increase for public education.

The budget trims spending from general state revenues by about $150 million and cuts 2,800 or more government jobs.

Welfare cuts could leave 80,000 single, able-bodied people without benefits, welfare advocates contend. And hundreds of Public Aid Department caseworkers will be cut. The state's economic development agency is being cut by two-thirds, and the mental health agency, despite a small funding increase, will lose several workers.

The Taxpayers' Federation of Illinois, a business-funded watchdog group, said lawmakers left $960 million in unpaid bills, under funded pension and health insurance funds by $349 million and underestimated Medicaid costs by $30 million.

Although the organization could not be reached during the Fourth of July holiday, a telephone message informed callers that a report on the budget had been mailed to all its members.

The Taxpayers' Federation predicted that lawmakers will end up performing emergency surgery on the budget.