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Lawmakers Slam Hospital Bed Tax Plan

Posted on: Wednesday, 3 May 2006, 21:00 CDT

By Bob Groves, The Record, Hackensack, N.J.

May 3--TRENTON -- Condemning Governor Corzine's proposed bed tax as "a death knell" to hospitals, legislators on Tuesday told the state health commissioner to come up quickly with other ways to get matching federal funds for charity care.

Health Commissioner Fred M. Jacobs acknowledged in a wide-ranging, four-hour Assembly Budget Committee hearing on health issues that the proposed bed tax is "certainly one of the most attention-getting proposals in the budget."

Jacobs said the state treasury department had determined that the nearly $50-per-day bed tax -- formally called the hospital provider assessment -- would effectively generate an additional $215 million in federal funding for charity care. Most members of the committee, however, said the tax was unfairly distributed, would jeopardize financially strapped hospitals -- particularly those in the suburbs -- and cause some of them to close.

According to Corzine's plan to dig New Jersey out of its financial crisis, the hospital bed tax would generate $430 million annually. Half of those revenues would go to the state's general fund. The other half would be matched by federal Medicaid funds to reimburse hospitals based on how many indigent patients they serve.

Jacobs and his critics acknowledge that this system would create "winners and losers" among hospitals, with about two-thirds of them falling in the latter category.

Jacobs defended the proposal. "While this assessment has been widely criticized for the mechanism of redistribution" of charity care funds, he said in prepared remarks, "I think we can all agree that we must not pass up the opportunity to obtain $215 million in additional federal funds."

Sixteen other states have a similar hospital bed tax, Jacobs said. Hospitals in New Jersey have told him that the tax would cause them "big problems, but nobody said we will close" because of it, Jacobs said.

Committee members disagreed, however.

Many hospitals would be hard pressed to pay the bed tax, said Assemblyman Gary S. Schaer. "We're looking at a death knell" for many of them, Schaer said.

"This issue of taxing hospital beds is one of the worst things we can do," said Assemblyman Joseph R. Malone III. "There's nothing positive that comes out of our taxing beds."

Schaer asked Jacobs how the states without the bed tax generate revenue to match federal funding. The health commissioner said he did not know.

Committee chairman Assemblyman Louis D. Greenwald told Jacobs there are "other mechanisms" to get the money.

Greenwald told Jacobs to work with the New Jersey Hospital Association and to "present other alternatives to us" by 5 p.m. Friday.

Jacobs agreed, but said the hospital association wants to kill the tax. "We need to come to the table with no preconditions ... or we have nothing to talk about," Jacobs said.

Gary Carter, president of the hospital association, said it was his job to fight the tax, and that the state treasury could find other revenue sources.

In other issues, Jacobs said that today the health department will drop a proposed regulation for the state's new Smoke-Free Air Act that would require smokers to light up 25 feet from an indoor public place or workplace. Instead, he said, it will propose letting owners and operators choose whether to establish a site for outdoor smoking, to prevent smoke from entering non-smoking areas. This will allow business owners and local governments to develop policies and ordinances that are best for their community, he said.

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Copyright (c) 2006, The Record, Hackensack, N.J.

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Source: The Record - Hackensack, New Jersey

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