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Health Care Pool May Face Cuts

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By CATHERINE DOLINSKI, The Tampa Tribune

Published: January 3, 2008

TALLAHASSEE - The collision of a statewide campaign to cut property taxes with Florida's worst budget crunch in decades could give hospitals that treat the poor and uninsured a double dose of trouble next fiscal year.

At risk is the state's Medicaid safety net, a $1.95 billion "low-income pool" of local as well as state tax dollars that Florida uses to bring in federal matching funds. The state then distributes the money back to hospitals such as Tampa General and All Children's in St. Petersburg to reimburse costs of caring for the poor and uninsured that Medicaid does not cover.

The problem: Of the more than $730 million that counties and other local taxing authorities pour into the pool, $526 million is ad valorem property tax revenue - the very taxes that lawmakers and Gov. Charlie Crist are pushing to cut this year.

Next fiscal year, which begins in July, the low-income pool and related programs will require an additional $98.1 million from local sources to cover the projected costs of charity care. If ad valorem taxes fall short of the need, the state's budget chiefs will have to decide whether to fill the gap with state money.

Last spring, they did exactly that, appropriating $81 million in one-time revenues to make the program whole. But with Florida facing a $2.5 billion shortfall for this year and next, it will be a tough year to lobby for handouts - and poor patients as well as hospitals could wind up paying the price.
Tough Choices
Of all portions of the state budget that could feel the pinch from dwindling revenues, health care is among the most vulnerable because it is the second-largest component of the budget. That places it only behind education, which lawmakers hope to hold harmless from the effects of recent and proposed property tax reductions.

House Health Care Council chairman Aaron Bean, R-Fernandina Beach, said he no longer can promise that his committee will not cut services in light of the budget shortfall. He expects, he said, that lawmakers may trim the current state budget at the beginning of the spring legislative session before turning around to crunch the bleak numbers for the upcoming fiscal year.

"There's going to be some hard decisions, and some tough reductions," Bean said. "It's not going to be like what we've seen in the past."

Durell Peaden, chairman of the Senate Health and Human Services Appropriations Committee, agrees. "We've already cut to the bone," he said. "We're down to rocks."

The rising cost of health care only adds to the pressure, as does the number of uninsured in Florida: 3.6 million, according to the U.S. Census Bureau's August report. That number is expected to rise with unemployment, which increased in Florida by 0.1 percent in November to 4.2 percent, or 396,000 jobless people. Unemployment has been creeping up in Florida since the start of 2007, when the rate was 3.3 percent, reflecting 305,000 jobless.

"You're going to see Medicaid rolls begin to go up," former Senate President Tom Lee of Brandon said. "The deeper the economic downturn, the more people will end up on welfare rolls and Medicaid rolls and without insurance. More people will be presenting themselves in emergency rooms as well."

With lawmakers talking of cutting Medicaid reimbursement rates by as much as 8 percent, hospitals will rely even more this year on the low-income pool and associated programs to offset the gaps in coverage, said Gary Carnes, chief executive officer of All Children's Hospital in St. Petersburg, which received $26.25 million from the program this fiscal year.

About 55 percent of All Children's patients are on Medicaid, which typically covers 75 to 80 percent of the cost of care, Carnes said. "That's why these low-income pool payments are so important; they were designed to try to make up ... some of the shortfall."

Other local recipients include Tampa General, which gained nearly $60 million from the program; St. Joseph's Hospital netted $17.8 million. Those net gains follow Hillsborough County's contribution of more than $31 million into the pool. Pinellas County paid in nearly $24.6 million.

Counties Helping Counties

The program relies heavily on "donor counties" that pay more than their proportionate share into the program. The additional local money, mostly from South Florida, benefits hospitals in smaller counties that lack the authority to levy special taxes for hospital and health care funding.

With a $9.1 billion property tax-cut constitutional amendment on the Jan. 29 ballot and lawmakers and the governor seeking additional property tax cuts, it's unclear how much of the program could be lost as a result.

"The property tax amendment disproportionately affects our most populous communities," said Sen. Nan Rich, R-Sunrise, who sits on Peaden's appropriations committee. "These communities give more than their fair share to the program; they're donor counties. When we cut back now on ad valorem taxes, we run the risk of them not being able to provide the full amount they have been contributing. They won't have it to give, and that will affect the entire state."

Every Florida-based dollar lost costs a 55.4 percent match from the federal government, said Paul Belcher, a Florida Hospital Association vice president who chairs the state's Low Income Pool Council. That match rate for 2008-09 is down from this year's 56.8 percent, which will force localities and possibly the state to make up the difference.

However the budget pressures play out, they will have no effect on the law requiring hospitals to provide emergency care to any patient, regardless of his or her ability to pay, Belcher said.

"What could change is care for charity patients that is not emergent," he said. That could mean anything from removing fibroid tumors to treating back injuries.

Hypothetically, a shortage in the low-income pool and related programs could cancel out elective heart surgery for a poor patient, Belcher said, or surgical treatment of a painful hernia.

Peaden, R-Crestview, said the low-income pool program is important, but he does not know where the money will come from.

"It's got to be scaled down," he said of the funding need, adding that his appropriations committee will have to look carefully at costs of health care delivery and consider funding requests in the context of revenue constraints.

Bean predicted that lawmakers would protect the low-income pool even in these tight times, given the federal dollars that the program brings into the state, but he could not say how the state would make up any shortfall in the program.

The program was of highest priority last session in the House, which persuaded the Senate to provide additional dollars to keep the program intact. In an e-mailed statement this month, House Speaker Marco Rubio called it "a great program" that has leveraged local and state money well to meet health needs in Florida.

Nonetheless, said Rubio, the Legislature's loudest champion of cutting property taxes, "government cannot afford to operate at a price beyond what the people of Florida can pay."

"We are aware of the anticipated costs of the program," he continued. "However, we are still early in the budgeting process."

Reporter Catherine Dolinski can be reached at (850) 222-8382 or cdolinski@tampatrib.com.

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