Stimulus funds to keep state hospital tax at bay

Georgia will use more than $1 billion from a federal stimulus package to plug holes in its Medicaid program and save a homeowner tax relief program. The funding also allows the state to avoid placing a 1.6 percent fee on hospital revenues and insurance companies next fiscal year.

But with state revenues now estimated at $1.6 billion less for the fiscal year that begins July 1, Gov. Sonny Perdue proposed a new round of cuts that would include Medicaid providers, spokesman Bert Brantley said.

Mr. Perdue will use $467 million of the stimulus funds to plug holes in a revised fiscal year 2009 budget and $1.1 billion when fiscal year 2010 is added, Mr. Brantley said. That includes closing a projected $208 million deficit in Medicaid and saving the $428 million homeowner tax relief grant program, although that program could have been saved through cuts, he said.

It also means eliminating a proposed 1.6 percent fee on hospital revenues and insurance companies that would have raised $324 million "as of today," Mr. Brantley said. That tax, for example, would have meant a $6 million to $8 million hit to University Hospital, said J. Larry Read, the CEO of University Health Care System.

But the state is casting a gloomy eye on its revenues for next year and proposing cuts to match it.

That means a proposed Medicaid payment cut of about 10 percent to hospitals, about $80 million, and 6 percent to providers, about $68 million, Mr. Brantley said.

Rural hospitals had been hoping for something more, said Jimmy Lewis, the CEO of HomeTown Health, which represents 55 rural hospitals in Georgia.

"The state is going to try to divert as much money as possible into non-Medicaid programs, and as the result of that we've got hospitals that are paid 85.6 percent of costs ... and they get no real benefit out of the stimulus, other than an offset of the (Medicaid) shortfall," he said.

Reach Tom Corwin at (706) 823-3213 or tom.corwin@augustachronicle.com.