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Court should nix hospital tax grab

Last modified: 7/31/2011 12:00:00 AM
House Speaker William O'Brien and his fellow Republicans may be able to add yet another distinction to their string of accomplishments: Theirs would be the state whose government reimburses health care providers the smallest percentage of the cost to care for the poor. Voters should ask themselves if is this what they want for their state.

New Hampshire hospitals are paid less than 50 cents on the dollar to care for Medicaid patients, a population made up primarily of poor women and children. But that was before the Legislature decided to break a two-decade-old agreement that worked like this: The state would tax hospitals to, in effect, borrow millions of dollars from them. It would then use the borrowed money to get federal matching funds, keep the federal funds, and give the borrowed money back.

This year, however, the Republican legislative majority said, "Uh uh. We're keeping ALL the money," thus stiffing hospitals for some $250 million that they'd already factored into their budgets.

Last week, 10 New Hampshire hospitals sued the state in federal district court over the move. Taking the money, they argue, violates federal laws, including one that requires that states pay doctors, hospitals and other health care providers rates high enough that they are actually willing to treat the poor.

Medicaid recipients in New Hampshire have always had to struggle to find doctors willing to treat them, but the massive state cut in hospital reimbursements will make care, other than emergency services, much harder to get. To cope with the loss of so much money hospitals have begun closing programs, laying off employees and debating whether their primary care practices should stop taking new Medicaid patients.

Manchester's Elliot Health System just laid off 182 employees. Southern New Hampshire Medical Center in Nashua pink-slipped 100, and layoffs are expected at other hospitals. So much for the Republican claim to be pro-business job creators. Their policies are doing serious damage to a once-healthy industry. They're eliminating what could end up being 500 or more good-paying jobs, putting more pressure on the state's unemployment compensation fund, driving up insurance premiums for employers and making it harder for them to hire - never mind reducing access to health care by the poor.

The hospitals want federal Judge Steven McAuliffe to issue an injunction that prevents the state from further reducing Medicaid reimbursement rates.

If the hospitals succeed, the Legislature has two choices: raise revenue or slash another $250 million from an already sorely diminished state budget. House leaders have made their position clear. They'll cut, not tax those who can afford to pay.

Their starve-government ideology means that many people will be hurt. It also means higher property tax bills when the poor turn to local welfare offices for help.

Medicaid is a federal matching program, which in New Hampshire's case, means that the federal government pays half the cost of caring for the poor while the state supposedly pays the other half. But the state now gets its share of the money by taxing nonprofit hospitals, which lose money every time they care for a Medicaid recipient. That means the poor get even less health care and the federal government gets nothing in return for its match. The state's Medicaid funding system, which has long been on the shady side, is now a fraud. The state deserves to lose the suit.


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