ISSUE IN-DEPTH: PAYING FOR MEDICAID IN GEORGIA: Tax would tighten access to health care

No one, least of all health insurers, believes Georgia’s Medicaid system is adequately funded. In fact, health plans already cover much of the gap between Medicaid reimbursement and actual costs when those who have insurance pay higher costs to make up for patients who do not. And Georgia health plans have a long record of voluntarily making major donations to support indigent care, including a recent $5 million contribution to Grady Memorial Hospital.

We wholeheartedly agree our state should set policies that make affordable health insurance coverage available to more working families. This will encourage healthy behavior, lower costs for the health care system and, most importantly, give families the security that results from knowing health care bills will not drive them to bankruptcy. And the single most important thing we can do to get more Georgians insured is lower the cost of health care.

Until a few months ago, it appeared the Department of Community Health understood this reality. The administration of Gov. Sonny Perdue offered an innovative plan to help small businesses provide health insurance to their employees. The Legislature, with the governor’s support, cut taxes on consumer-driven health plans, encouraging patients to be smart shoppers for health care services. In short, Georgia was becoming a model state for innovative policies that gave working families the security and dignity that results from being able to cover their health care needs.

Fast-forward to today. Georgia faces a budget crisis and the Department of Community Health wants to solve it by charging every Georgian with an HMO plan “civic rent” —- which is apparently a fancy word for a tax increase. These funds will reportedly be used to avoid making internal budget reductions. Instead of finding savings through staff reductions, innovative policies, broad implementation of managed care models or reduction of nonmandated services, the department has chosen to propose a tax increase and become the only state agency to increase its budget during tough economic times.

The problem with this idea is that economic research has proven the obvious fact that increasing premiums forces businesses and individuals to stop buying health insurance. The Department of Community Health wants to double projected increases in health care costs during a recession when businesses are already struggling to provide health care. It’s fine to talk about “civic rent” on newspaper editorial pages, but the words acquire different meaning when a parent has to go home and tell his or her family that they no longer have health insurance thanks to a government tax increase.

The reality is that health plans cannot simply internalize a tax increase this large. Some of the costs can be absorbed, but a large portion will be shared with two groups: health plan members and health care providers. Members —- including large and small businesses —- will be forced to either switch from HMO models to higher priced plans with richer benefits or pay higher premiums. Additionally, already struggling doctors and hospitals may face lower reimbursement rates as insurers swallow this massive tax increase.

The Medicaid system is underfunded, but further increasing health care costs will only make the problem worse. Instead of taxing insured Georgians, the department should first do as every other agency is doing and reduce its own budget. Once that is done, if additional revenues are needed, it should follow the constitutionally established process and seek more funds from the Legislature.

Ultimately, providing health care to those who can’t afford it is a burden that must be borne by all Georgians, not just by those who buy health insurance coverage.

> Kirk McGhee is executive director of the Georgia Association of Health Plans.