In the wake of a court decision that threatens to put New Hampshire $36 million in the hole over hospital payments, House Finance Chairman Neal Kurk, R-Weare, has an untraditional approach to making up the money: more taxes.
In a last-minute amendment to a bill designed to fund mental health initiatives, Kurk proposed broadening the state’s Medicaid Enhancement Tax, currently paid by hospitals, to a broad range of services, from nursing care to ambulatory services to X-rays.
Kurk said the additional revenue could benefit the state’s health, from improving the state’s Medicaid federal match rate to shoring up the state’s uncompensated care fund set aside for hospitals.
And he said the proposal would “represent an assessment on a relatively large number of medical providers that would spread the burden of this tax out.”
The urgency comes out of a March 6 federal district court decision that revised a key federal formula over state hospital payments, which put the state on the hook for an additional $36 million in fiscal year 2018 and $37 million for fiscal year 2019. State officials are attempting to negotiate a lower rate with hospitals; Kurk said the new revenue from the tax plan could help plug the hole.
The amendment, added to Senate Bill 590 and presented Tuesday at the House Finance Committee Division III, would add a 5.5 percent tax on providers of specialized services, sweeping up county nursing homes and community health centers. Providers were not pleased.
One after another, industry lobbyists testified before the committee against the proposal, arguing that the tax would hit them at a time when low Medicaid reimbursement rates and workforce shortages are already hammering the industry.
Bob Dunn, representative for the New Hampshire Healthcare Association, which represents nursing homes, said the tax would add an additional financial burden onto the federal tax they already have to pay, known as the “MQUIP,” New Hampshire nursing homes have been struggling to stay solvent, as federal Medicaid payouts remain low.
Other providers said the measure would represent a tax without a benefit. Currently, hospitals that pay Medicaid Enhancement Taxes are also entitled to “disproportionate share hospital” payments under the Medicaid law. Providers affected by Kurk’s proposed tax would not be entitled to those payouts.
Steve Ahnen, president of the New Hampshire Hospital Association, also opposed the idea.
“The amendment would amount to a significant tax increase that would burden every man, woman and child who receives health care in New Hampshire,” he said.
Meanwhile, Democrats attacked the measure, calling it an “income tax” on providers and doctors. Some added that the amendment was presented too late to be properly scrutinized.
“Proposing a massive tax increase via a last-minute amendment is poor management,” said Mary Jane Wallner, D-Concord, a member of the committee. “The complexity and implications of this proposal require an entire session to vet.”
But Kurk said it would help to add stability to an unstable revenue system and spread the burden of the tax. And responding to a pointed question from Rep. Cindy Rosenwald, D-Nashua, Kurk said the proposal was a matter of perspective.
“My idea of fairness and your definition of fairness don’t really matter,” he said. “It’s basically the vote of the division, the committee and the full House.”
Kurk added that he would be okay with making changes to the proposed taxes, or applying them elsewhere, as long as the fiscal outcome remained the same.
The amendment is set to be discussed and voted on by the Division III subcommittee in coming days.
(Ethan DeWitt can be reached at edewitt@cmonitor.com, or on Twitter at @edewittNH.)