A lobbyist for Maine’s hospitals is not too pleased with the portion of Gov. Paul LePage’s two-year budget proposal that would allow municipalities to tax nonprofit property — including private colleges, parochial schools and hospitals.
The colleges have said the proposal would place an “undue economic burden” on students. Now, the hospitals are also lining up to oppose the plan.
“A tax on hospitals is a sick tax,” said Jeff Austin, a vice president with Maine Hospital Association and the group’s lobbyist in Augusta.
The proposal is meant to offset some of funds lost at the local level when the state eliminates municipal revenue sharing in 2017. The plan would allow towns and cities to make up for lost funds by assessing property tax half of a nonprofit’s property valuation (although the first $500,000 worth of property would be exempt).
LePage’s pitch is that large nonprofits contribute to increased property tax rates in the service centers where they’re located. The presence of hospitals and colleges, for example, means bigger budgets needed for local infrastructure and emergency personnel — costing municipalities money while the nonprofits pay nothing in property taxes.
Austin said the group is still working out exactly how much its members would be obligated to pay if the proposal goes through as written, but that he expects it to be in the tens of millions of dollars.
The state’s hospitals, he said, simply don’t have that much money lying around.
“Our margins are 1 percent, on average. That means 99 percent of the money that comes in goes right out the door for nurses salaries and medical supplies and utility costs,” he said. “We have no choice but to pass through costs to our patients.”
The hospitals have been on-again, off-again beneficiaries of LePage’s policies since the Republican governor took office in 2011. In his first term, LePage — disgusted by what he described as the state’s failure to pay its bills — successfully paid off $263 million of state Medicaid debt, leveraging federal funds for a total windfall of nearly $750 million to the state’s hospitals.
However, LePage also successfully squashed lawmakers’ attempts to expand Medicaid to cover tens of thousands more low-income Mainers — a federal initiative that would have led to the hospitals being reimbursed for a lot of care they currently provide to uninsured, low-income Mainers for free.
Now, LePage’s two-year $6.3 billion budget proposal includes more for hospitals not to like. Aside from the loss of property tax exemption, hospitals will see an elimination of facility fees amounting to about $8.7 million over the two-year period, a reduction in payments for non-emergency trips tot he emergency room worth an estimated $3 million
Hospitals would also benefit from a provision of the budget that uses state funds to make up for a loss in federal Affordable Care Act funding to maintain 100 percent reimbursement rates for primary care to Medicare patients. That proposal means about $15 million for primary care doctors, some of which work in hospitals.
All told, though, Austin said the budget will cost hospitals untold millions. He said it’s particularly damaging because hospitals have continued providing services to the roughly 30,000 low-income Mainers cut from the Medicaid because of eligibility changes two years ago. Many of those patients are unable to pay, he said.
“It was ‘welfare’ when the state provided those people a benefit,” he said. “I don’t know what they call it when we do it, but we still do it.”