Tax day seems like a perfect time to talk about another tax problem, one that threatens health care in the state of Mississippi. As America's poorest state, Mississippi enjoys the distinction of having a high percentage of citizens that qualify for Medicaid. Mississippi hospitals see a lot of Medicaid patients, with the largest burden falling on the state's 10 publicly-owned hospitals. At our local hospital, about 25% of hospital charges are billed to the Medicaid program.
And most of it is never paid. This is a serious problem.
Medicaid, as most readers know, is a federally funded program that provides health care for the poor. It is administered by the states, with federal matching funds. Each state gets matching funds based on its per-capta income, and the match ranges from 50% for relatively wealthy states like California and Connecticut to 80%, the highest in the nation, for Mississippi. What this means is that in Mississippi, for every dollar the state spends on Medicaid, the federal government gives 4.
In the past, states, being states (that is, always looking for a free ride on the federal government's credit card), employed a clever workaround for the matching dollar issue. Instead of raising taxes for Medicaid dollars, the states paid nothing and simply instructed hospitals to put up the money themselves. The accounting worked this way: A hospital seeking Medicaid money would put up its own money, and the feds would match it. In Mississippi, that meant if a hospital had $2 million in Medicaid charges, it would put up 20% of that, and the federal government would then pay the rest.
That changed in the late 1990s when Washington decided this dodge was not the intent of the law. Congress then passed regulations to gradually close this loophole, requiring states to actually raise revenues to pay their percentage of Medicaid. Which is where the trouble began.
Most states have scrounged around and come up with revenue plans to pay their percentages out of pocket. Some states have adopted hospital bed taxes, in which hospitals pay a percent of revenue earned by each hospital bed. Others have raised excise taxes, including cigarette or alcohol taxes. Arkansas levied a one cent tax on soft drinks.
Mississippi, as a very conservative and tax-adverse state, has so far done nothing, instead allowing hospitals that care for Medicaid populations to fall into insolvency largely over unpaid Medicaid charges. The state government is considering action, with all the urgency of a bunch of frat boys moving to complain that the kitchen sink is running hot and cold Budweiser.
Our dear Governor, Haley Barbour, favors the bed tax. Key members of the state legislature favor cigarette or alcohol taxes. Unfortunately, there is a standoff because neither side will support the other's proposal. Private hospitals are lobbying legislators against the bed tax, because they only see a small number of Medicaid patients (less than 5%) and would rather do without the Medicaid than pay a new tax. The governor is against the cigarette tax, probably for two reasons: (1) He made a fortune as a Washington lobbyist before becoming governor and doesn't want to burn old bridges by offending the tobacco industry; and (2) he is angling for a cabinet-level appointment should John McCain win the presidency in the fall and doesn't want a tax hike on his record. (For the record, the cigarette tax in Mississippi is 18 cents a pack.)
So while these two groups selfishly duke it out over Medicaid funding, hospitals that provide care to the poor suffer with unpaid Medicare bills. A few weeks ago, the public hospital in Natchez declared bankruptcy. Another hospital in the Mississippi Delta is considering defaulting on its bonds. A third, in Hattiesburg, declared a $32 million loss last year and instituted wage cuts and layoffs. That Hattiesburg hospital may also be looking at bankruptcy.
This is the human suffering political stubborness has wrought. The standoff between the Governor and the Legislature is like two groups of sailors on a sinking ship arguing whether they should use plastic or metal buckets to bail the water. They posture while several of the state's most important hospitals go down to the bottom.
The worst part is that, with the 80% match, a dollar raised for Medicaid results in a $4 bonanza for the state. If I could find an investment that yielded a 4 to 1 return, I would be hocking the hubcaps on my car for investment money. It is irresponsible that our representatives in Jackson would jeopardize one of the largest industries in the state for their own political gain.
And by the way, the standoff also hurts patients, and their access to quality medical care. But I forget myself. This is Mississippi. We don't give a damn about the poor.
And most of it is never paid. This is a serious problem.
Medicaid, as most readers know, is a federally funded program that provides health care for the poor. It is administered by the states, with federal matching funds. Each state gets matching funds based on its per-capta income, and the match ranges from 50% for relatively wealthy states like California and Connecticut to 80%, the highest in the nation, for Mississippi. What this means is that in Mississippi, for every dollar the state spends on Medicaid, the federal government gives 4.
In the past, states, being states (that is, always looking for a free ride on the federal government's credit card), employed a clever workaround for the matching dollar issue. Instead of raising taxes for Medicaid dollars, the states paid nothing and simply instructed hospitals to put up the money themselves. The accounting worked this way: A hospital seeking Medicaid money would put up its own money, and the feds would match it. In Mississippi, that meant if a hospital had $2 million in Medicaid charges, it would put up 20% of that, and the federal government would then pay the rest.
That changed in the late 1990s when Washington decided this dodge was not the intent of the law. Congress then passed regulations to gradually close this loophole, requiring states to actually raise revenues to pay their percentage of Medicaid. Which is where the trouble began.
Most states have scrounged around and come up with revenue plans to pay their percentages out of pocket. Some states have adopted hospital bed taxes, in which hospitals pay a percent of revenue earned by each hospital bed. Others have raised excise taxes, including cigarette or alcohol taxes. Arkansas levied a one cent tax on soft drinks.
Mississippi, as a very conservative and tax-adverse state, has so far done nothing, instead allowing hospitals that care for Medicaid populations to fall into insolvency largely over unpaid Medicaid charges. The state government is considering action, with all the urgency of a bunch of frat boys moving to complain that the kitchen sink is running hot and cold Budweiser.
Our dear Governor, Haley Barbour, favors the bed tax. Key members of the state legislature favor cigarette or alcohol taxes. Unfortunately, there is a standoff because neither side will support the other's proposal. Private hospitals are lobbying legislators against the bed tax, because they only see a small number of Medicaid patients (less than 5%) and would rather do without the Medicaid than pay a new tax. The governor is against the cigarette tax, probably for two reasons: (1) He made a fortune as a Washington lobbyist before becoming governor and doesn't want to burn old bridges by offending the tobacco industry; and (2) he is angling for a cabinet-level appointment should John McCain win the presidency in the fall and doesn't want a tax hike on his record. (For the record, the cigarette tax in Mississippi is 18 cents a pack.)
So while these two groups selfishly duke it out over Medicaid funding, hospitals that provide care to the poor suffer with unpaid Medicare bills. A few weeks ago, the public hospital in Natchez declared bankruptcy. Another hospital in the Mississippi Delta is considering defaulting on its bonds. A third, in Hattiesburg, declared a $32 million loss last year and instituted wage cuts and layoffs. That Hattiesburg hospital may also be looking at bankruptcy.
This is the human suffering political stubborness has wrought. The standoff between the Governor and the Legislature is like two groups of sailors on a sinking ship arguing whether they should use plastic or metal buckets to bail the water. They posture while several of the state's most important hospitals go down to the bottom.
The worst part is that, with the 80% match, a dollar raised for Medicaid results in a $4 bonanza for the state. If I could find an investment that yielded a 4 to 1 return, I would be hocking the hubcaps on my car for investment money. It is irresponsible that our representatives in Jackson would jeopardize one of the largest industries in the state for their own political gain.
And by the way, the standoff also hurts patients, and their access to quality medical care. But I forget myself. This is Mississippi. We don't give a damn about the poor.
Update on 2008-04-16 16:11 by Michael Hebert
Last night, the Medicaid funding bill died in committee on the last day of the legislative sesson. One of the main discrepancies that prevented its passage is a debate over Medicaid renewal. The governor, and many legislators, believe all Medicaid patients should be required to renew in person, at a face-to-face interview. This is only required in Mississippi and in one other state, New York. The other 48 states allow renewal by mail. The face-to-face interview is supposed to prevent fraud, though there is no hard data to show that it does.
At any rate, it is discouraging that funding for the entire Medicaid bill is being held hostage to a single issue. My own opinion is that face-to-face interviews are not necessary; Medicaid payments are made directly to doctors and hospitals and never to patients, so true fraud is probably rare. Regardless, why delay payments to cash-starved hospitals over a procedural matter? The face-to-face issue can always be tackled later.