By State Representative Jason Spencer (R-Woodbine)
On January 14, 2013 the Georgia General Assembly will begin another legislative session. There will be several major issues that confront members during the 40 legislative days. The top issue will be finding ways to balance the budget while facing difficult healthcare policy issues.
State Budget
In every session, we prepare two budgets – an amended budget for the current fiscal year, and a full year budget to set spending. Georgia ended Fiscal Year 2012 in the black. Both the Amended FY 2013 and FY 2014 budgets are based on projected growth. To give you some perspective, the 2012 budget was based on a 5.2 percent tax growth and the 2013 budget was based on a similar growth rate; however, there has only been a 3.7 percent tax growth and expected cuts will have to be implemented. As a result of lower growth, the Governor has called for a 3 percent reduction plan from all agencies for FY 2014, as well as a 5 percent reduction plan in Medicaid to reduce the program’s $400 million deficit at current spending levels. That 5 percent cut would equate to a $100 million reduction in the Medicaid deficit. Only K-12 education formula funds and state schools are exempt from the cuts.
The $400 million Medicaid shortfall is a result of the state having difficulty keeping up with the rising cost of health care and Medicaid enrollment growth. For instance, 52 percent of all Georgia pregnancies in 2010 were financed by Medicaid and the trend is growing. To keep up with rising costs, it is possible that cuts in Medicaid reimbursements could be considered, but that decision could cause more healthcare providers to not accept Medicaid patients. Furthermore, to stem further cuts in reimbursements to providers, the state will look to draw down more federal dollars. One way to stem cuts to reimbursements is to renew the controversial Medicaid Hospital Provider Payment Agreement fee assessed on most hospitals, which is set to expire on June 30, 2013.
Medicaid Provider Hospital Fee
Adopted in Georgia amidst controversy as a temporary measure in 2010 to plug holes in hospital Medicaid rates in an ever expanding Medicaid budget, the fee is a percentage of a hospital’s net revenue, which may be used to draw federal matching funds through a federally funded financing mechanism that redistributes the total back to hospitals throughout the state that serve a larger portion of poorer clientele.
The fee, which generates about $251 million annually, qualifies the state to accept more federal matching money to shore up Medicaid and attempts to soften cuts to provider reimbursements. By accepting this money, the state in essence contributes to federal deficit spending; however, with a $400 million Medicaid deficit looming, allowing the provider fee to expire could require a 30 percent cut in reimbursement to hospitals, which may result in fewer Medicaid patients being accepted.
There are hospitals who are winners and losers under this financing mechanism. Hospitals like Grady Memorial in Atlanta, which serve a large Medicaid population benefit from the “bed fee” policy, while other community hospitals take a loss. The losses in revenue by “donor” hospitals is usually “passed on” through cost shifting or just absorbed as a cost of doing business, which can perpetuate the cycle of rising health care costs.
The Affordable Care Act
Now that the Affordable Care Act (aka, “ObamaCare”) law stands, Georgia has elected not to create a key feature of the ACA, a state based health insurance exchange, which is a government created market place where individuals can purchase health insurance. Creating a Georgia specific health insurance exchange could add 650,000 new people to our growing and costly Medicaid rolls, which would allow the state to accept federal subsidies thus contributing to more federal deficit spending. Refusing to set up a costly insurance exchange reduces Georgia’s risk of expanding Medicaid; however, refusal will invite the federal government to set up their own exchange in the state. Of note, individuals may not be eligible to receive subsidies in the federal exchange.
Education Funding Reform
During the 2011 legislative session, the Georgia General Assembly formed a commission to study the way the state funds education. Currently, the state funds education through a complex funding formula that was created in 1985. Many believe that this funding model is out of date and should be reformed in order to maximize tax dollars efficiently. Quality education is the first step towards insuring a prosperous future for Georgia and also serves as an important tool for attracting businesses to this state in order to produce job growth. It will be a top priority during the legislative session to address education funding.
Ethics Reform
After an overwhelming majority of voters voiced approval to restrict lobbyist spending for members of the legislature through a 2012 nonbinding ballot question, efforts to seriously examine the state’s ethics laws are underway. Speaker David Ralston has formed a special committee in the House to research what other states have done to address this issue. I expect some type of reform package to be presented to the General Assembly in the early part of the legislative session.
Representative Jason Spencer represents the citizens of District 180. He was elected into the House of Representatives in 2010, and currently serves on the Game Fish & Parks, Special Rules, and Children and Youth committees.
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