The governor gave away the store, and we probably have to live with it for a few years. That is the hard truth about the Medicaid enhancement tax deal legislators are to vote on this week.
The tax, as revised in the last legislative session, had been ruled unconstitutional by two judges. The state almost certainly would lose if it appealed the last ruling to the state Supreme Court. So the tax had to be fixed. The deal Gov. Maggie Hassan brokered with the hospitals is a great one — for the hospitals. Word to the wise: do not hire Atty. Hassan to negotiate on your behalf.
The deal fixes the immediate crisis created by the court rulings. It gets 25 of 26 hospitals to withdraw from the lawsuit, restoring a $320 million hole in the budget over the next two years. In so doing, it also prevents the state’s bond rating from being lowered. Without a deal, that catastrophe would be all but certain. It also lowers the MET rate and ends the practice of using some of the money to shore up the state’s general fund. But it does all of this at a great future cost.
The state’s 13 small, rural hospitals will continue to be reimbursed for uncompensated patient care (treating the poor who cannot pay) at a rate of 75 percent of their costs. The 13 large hospitals got nothing in the current budget. Before that, their reimbursements fluctuated. They wanted stability. They surely would have settled for a figure far south of 50 percent just to have predictable numbers that amounted to more than they got before. Gov. Hassan gave them a whopping 50 percent immediately, later upgraded to 55 percent — provided the state receives enough revenue to cover that expense.
The deal obligates the government to make future payments it probably cannot afford. Does that sound familiar?
Legislators should see if they can amend the bill so that the deal expires and must be reauthorized in 2016 or 2017, when many Obamacare changes take place, including funding levels for uncompensated care. The deal is not sustainable over the long term, which hospital executives have to know. If the alternatives are this deal or nothing, then this deal is preferable. But better terms have to be reached before long. Though it could reopen the lawsuit, legislators will have to revisit this deal within a few short years.