By Richard Locker, Commercial Appeal
March 11, 2010

NASHVILLE – Republican legislative leaders say they are open to approving a new hospital fee proposed by the Tennessee Hospital Association to offset massive TennCare cuts – but only if it’s not called a tax and Democrats back it too.

The 3½ percent tax – or “coverage fee” as THA calls it — would be levied on net patient revenue but would not, the association says, be passed on to patients.

The $230 million it would raise would draw down $430 million more in federal Medicaid money. The total would partially offset $1.2 billion in federal and state TennCare cuts proposed by Gov. Phil Bredesen to help balance the annual state budget for 2010-11.

The Greater Memphis Chamber endorsed the hospital fee Wednesday as a means of offsetting TennCare cuts that threaten the Regional Medical Center at Memphis with closure.

Lt. Gov. Ron Ramsey, the Senate speaker, said today he understands the need for the fee and is open to it but won’t commit to backing it because no bill has been filed that puts its details in writing.

“I think we can see the need for it…. I understand that if these cuts go into affect that the governor has proposed, then it would be devastating to hospitals,” Ramsey said.

But Ramsey — who opened his weekly press conference by opposing Bredesen’s plan for a $21 million tax increase on cable and satellite TV service because it’s a tax increase — said the hospital “fee” is not a tax increase.

“It’s not a tax increase. It truly isn’t,” he said. “This is a voluntary assessment by the hospitals. They’ve agreed to it. They’re coming to us with this plan. And it would not be passed on to patients’ bills but would actually be eaten by the hospitals. They’d rather absorb a 3 percent cut than a 25 percent cut.

“The last and maybe most important to me right now is that this also would not be something that would increase the federal deficit. Keep in mind that the money has already been appropriated for Tennessee in Washington, D.C. If we went through with these cuts, that money already appropriated to Tennessee would stay in Washington, so this is really just figuring out a way of getting the money that has already been appropriated to us for our TennCare program,” said Ramsey, one of four Republican candidates for governor.

Moments earlier, Ramsey said he’s against the governor’s proposal to offset some higher education and criminal justice system budget cuts by repealing a sales-tax exemption on the first $15 of monthly cable service – already paid by satellite TV subscribers – and increasing an existing 8.25 percent tax on cable and satellite TV service to 9.4 percent.

“I want to be able to go home – I believe this with all my heart — and be able to say we didn’t raise your taxes. I don’t want to go home and say we didn’t raise your taxes except on your cable bill.

“For the amount of money it brings in, it’s not worth it first of all. And second of all, it’s the wrong thing to do.”

Bredesen has pointed out that satellite TV subscribers already pay sales tax on the full amount of their monthly bills. When legislators taxed cable TV bills, they exempted the first $15 as “basic service.” The governor wants to end the exemption, equalizing taxes paid by cable and satellite subscribers.

The hospital fee is controversial in an election with candidates for governor and the legislature concerned about new taxes, even though the hospitals are asking for the fee on themselves.

Senate Republican Majority Leader Mark Norris of Collierville said Wednesday that despite the Greater Memphis Chamber’s endorsement, it’s too early to say whether the hospital fee will win approval. But if it does, he said, it must have broad bipartisan support and a “consensus that this is the right thing to do.

“My (Republican) caucus has not taken a position yet; we’re waiting to learn more about it. Those of us who have been involved in some discussions with the Hospital Association appreciate the hospitals’ willingness to assess themselves and to give up that net patient revenue. They assure us this can be done without passing it on to patients,” Norris said.

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