Today's Daily Record offers insight into how community hospitals are being taxed in the state budget that was enacted over my objections last July.  Don't be confused by the implication that the tax is still under consideration. It was passed and went into effect last year.

Orrville council resolution opposes new hospital tax

By PAUL LOCHER

Staff Writer

ORRVILLE -- City Council, at the request of Dunlap Community Hospital, voted unanimously to adopt a resolution urging the Ohio Legislature to reduce the negative impact of a new tax on hospitals.

House Bill 1 would tax hospitals' operating expenses 1.52 percent this year and 1.61 percent in 2011. The legislation would cost Dunlap an estimated $577,512 and hospitals across Ohio a total of $710 million over the two-year period, reportedly jeopardizing jobs as well as the level of health care.

State Rep. Ron Amstutz, R-Wooster, said the new tax "amounts to an outrageous attempt to directly tax Ohio's hospitals at a time when they are under severe financial stresses from such things as uncompensated care mandated by federal law, low reimbursements for Medicaid care, and the pressures of managed care contracting."

In a letter to Dunlap Community Hospital CEO Rod Steiger, Amstutz predicted, "Given the dependence created on this new revenue to sustain expanded Medicaid programs that are also supported by large infusions of temporary federal dollars, it will be a real challenge to halt this tax next year in the preparation of the two-year budget."

Amstutz said the government should be "very seriously concentrating on cost savings across Medicaid programs and avoid expansions of eligibility."

He said the primary purpose of the tax assessment is to use the funds it generates as a match to draw federal share of Medicaid payments for Medicaid services provided by hospitals.

Amstutz said an estimated $420 million of assessment money is expected to be returned to hospitals in the form of Medicaid reimbursements, although, he noted, this shifts money away from hospitals in areas such as Orrville that have a relatively low number of Medicaid patients.

The remaining $290 million is to be diverted for increased Medicaid expenditures elsewhere.

"This," said Amstutz, "plus the portion being shifted to hospitals outside our area, represents a clear state tax burden on our community hospitals."

At Monday's council meeting, at large Councilman Paul Vance characterized the amount of tax money flowing away from Dunlap Community as "disproportionate" to benefits received, and "not fair; not appropriate" for Ohio's hospitals in general.

Steiger said because Dunlap has had to write off $1.2 million in bad debts during the past year and is seeing an ever-greater influx of patients unable to pay for care, it cannot afford to pay taxes on operating expenses from which it is deriving no revenue.

Steiger said the tax increase is one Dunlap cannot afford.

Steiger, in a presentation made to council last month, requested the city draft a letter to the Legislature opposing HB1, asking it subtract the costs of Medicare and uncompensated care from the tax base and reduce the tax from 1.61 percent to 1.5 percent.

Reporter Paul Locher can be reached at 330-682-2055 or e-mail at plocher@the-daily-record.com.