Is NJ About To Let Towns Tax Hospitals? [AUDIO]

Local cities and counties would be allowed to tax the revenues of hospitals under a bill that is scheduled to be considered this afternoon by the State Senate Health, Human Services and Senior Citizens Committee.

Advocates say the idea is to use the money to increase Medicaid payments making more cash available for Medicaid to match. Opponents say some hospitals would pay the tax, but get nothing back. They also say the bill itself is ridiculously vague.

"We know so little, it's amazing," says Rick Pitman, executive director of the Fair Share Hospitals Collaborative. "The only thing that I can tell you that we know, for sure, is that there will be a tax on hospitals. It could turn into a huge number. We could be talking about millions of dollars per hospital."

Proponents of the bill say many hospitals would have more money to continue treating low-income residents if the Hospital Fee Pilot Program bill becomes law. There's a problem for suburban hospitals which treat far fewer low-income patients. It is very possible, if not likely they'll end up paying more in taxes than they would get back in Medicaid payments.

"If you're paying more than you're receiving you either have to cancel development programs," explains Pitman. "You have to back off on new things you want to do. In worst case conditions this could drive layoffs."

Under the bill, a participating city or county would be authorized to adopt an ordinance or resolution to impose a fee on general hospitals located within its borders, consistent with federal Medicaid regulations, and to enter into an intergovernmental transfer agreement with Department of Human Services.

There is one 'known' and too many 'unknowns' when it comes to the hospital fee legislation, according to Pitman.

"The definite thing that happens; certain hospitals get taxed," explains Pitman. "Does the (Medicaid) match happen? I don't know. How much is the tax? I don't know. How much is taken out (by local governments) before it's matched? I don't know. What's the time frame for Medicaid approval of this?" I don't know. The 'I don't knows' are frightening."