Wednesday, September 23, 2009

Committee looks at taxing Michigan doctors to help avert 12 percent Medicaid cuts

Michigan State Rep. Gary McDowell, D-Rudyard, said today that the Michigan House-Senate Conference Committee, which is looking for ways to erase a $2.8 billion budget deficit for fiscal 2010, is considering imposing a 3 percent provider tax on more than 15,000 physicians who practice in the state.

McDowell said the physician tax could raise $300 million to $400 million and help reduce 8 percent to 12 percent Medicaid cuts, which are being discussed in the conference committee.

The state Legislature must approve a budget before Oct. 1 or face a government shutdown.

The possible physician tax, known as a Quality Assurance Assessment Program fee, would be used to increase federal matching share dollars for the state’s Medicaid program. For every $1 the state raises, the federal government matches with another $1.72.

“Hospitals, HMOs and community mental health providers pay a QAAP provider tax,” McDowell said. “It is fair for doctors” to help fund the Medicaid program.

The Michigan State Medical Society has opposed the QAAP tax on physicians the past several years, said Dr. Richard Smith, medical society president. In 2005, Gov. Jennifer Granholm first proposed the physician QAAP tax.

“We cannot support that type of tax because it does not address the fundamental problem of underfunding with the Medicaid program,” said Smith, an obstetrician with Henry Ford Medical Group in Detroit. “This would be a third tax. Doctors already pay income tax and some pay a small business tax.”

Smith said cutting Medicaid and public health is not a good idea on the eve of possible outbreak of the swine flu, or H1NI.

Instead of a physician tax, Smith said legislators should approve a bill to prohibit smoking in the workplace, including restaurants. “This would help to reduce health care costs because fewer people would get chronic diseases,” he said.

Primarily because of declining Medicaid reimbursement, Smith said fewer physicians are participating in Medicaid. In 2005, only 64 percent of physicians participated in Medicaid, down from 88 percent in 1999.

McDowell said the conference committee is looking at a combination of budget cuts and increased taxes to avoid making deeper cuts in the Medicaid program.

Earlier, the Michigan Senate approved legislation to cut 8 percent out of Medicaid, but reduced tax revenue has forced legislators to look at tax increases or deeper budget cuts. The House did not take action on the Senate bill, forcing a conference committee.

“I don’t see how we can accept these budget cuts,” McDowell said. “We will have nursing homes close, hospitals cut services and community health agencies will be hard-pressed to provide services to 18 to 24-year olds.”

The Michigan Health and Hospital Association estimates that a 12 percent Medicaid budget cut would amount to $203 million in lost funding, including $54 million in general funds and $149 million is lost federal matching funds.

For hospitals, an 8 percent cut to inpatient and outpatient rates would total more than $135 million, including $36 million in general funds and $99 million lost in federal matching funds, said.

If the Medicaid cut is only 8 percent, nursing homes face more than $114 million in budget cuts, $40 million general funds and $74 million in lost federal matching dollars for fiscal 2010, said the Health Care Association of Michigan. There are about 400 nursing homes in Michigan.

By Jay Greene

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