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Phoenix to tax hospitals to aid uninsured patients

By Amy B Wang The Republic | azcentral.com

Tue Dec 11, 2012 10:46 PM

The Phoenix City Council on Tuesday adopted an ordinance to tax local hospitals and pool the money, a move that would generate more than $200 million in federal matching funds for the hospitals to care for uninsured and underinsured patients.

The vote created the Phoenix Access to Care Ordinance, which would impose a short-term tax on 11 local hospitals to generate about $130 million.

Under the ordinance, hospitals cannot pass the tax along to patients. [Well, who on earth is going to pay the tax? Santa Claus? The Tooth Fairy?] Instead, the money will create a funding source for the Arizona Health Care Cost Containment System, the state’s Medicaid program, and trigger a 2-1 federal match.

Mayor Greg Stanton praised the ordinance as not only good for the city’s residents but for hospitals across the state, which account for nearly $28billion of economic activity and almost 3 percent of jobs in Arizona.

“This is the right move for this city at this time for jobs and economic development,” Stanton said. “We simply cannot succeed ... if our hospitals are not strong. We cannot allow our hospitals to be put at a competitive disadvantage.”

More than 100 doctors, nurses and other representatives of the health-care industry attended Tuesday’s council meeting to support the ordinance, including several hospital leaders. [Of course they support the tax. The tax is a jobs program for doctors and nurses and pays them for giving free medical services to homeless folks] Many praised the plan as a partial — albeit temporary — solution to soaring “uncompensated care” costs in recent years due to unemployment and AHCCCS cuts.

“Changes to the AHCCCS program and the slowed economy have really hurt us,” said Linda Hunt, president of St. Joseph’s Hospital and Medical Center. “This is a short-term fix. It’s a temporary solution until the state policy makers can enact longer-term policies.”

Though Hunt was one of only a handful of people to speak during Tuesday’s meeting, before she began, she asked those in favor of the ordinance to stand up. Nearly everyone in the chamber did.

“We have a moral and legal obligation to care for those who might die,” said David Lamparter, chief financial officer of John C. Lincoln Health Network, as he testified in support of the ordinance later. “That comes at a great price.”

Phoenix officials said hospitals citywide are expected to incur about $540 million in costs next year for care of uninsured and underinsured patients.

In 2011, an effort to assess a similar tax on hospitals across Arizona failed in the Legislature. However, state lawmakers last year approved Senate Bill 1357, which allows cities to create their own pools of money to trigger federal matching dollars — effectively handing the issue over to local governments.

Only a handful of cities around the country have programs similar to Phoenix’s new ordinance, though 47 states impose “provider taxes,” according to Banner Health officials.

“First of all, this is a very unusual move for a city to do this,” said Councilman Bill Gates, who ultimately voted against the ordinance. Gates thanked those in attendance, as well as Stanton, for continuing the conversation on an important issue but also said he had questions about how the federal matching dollars would be distributed.

“I do not doubt, based upon the research and (the testimony), that there is a real issue with uncompensated care in the city,” Gates said. “I think everyone’s heart is in the right place, but, for me, I cannot vote for this ordinance today.”

Councilmen Sal DiCiccio and Jim Waring also voted against the ordinance.

The ordinance, which is set to go into effect Jan. 13, is contingent upon the city entering into an intergovernmental agreement with AHCCCS, which needs to get approval for the matching federal dollars from the Centers for Medicare and Medicaid Services.

“All indications are very positive, and I will personally, as I already have, be back in Washington, D.C., to seek approval for this,” Stanton said.

The assessment is also contingent on approval by the Municipal Tax Code Commission, which will add it to the model city tax code, said Phoenix Deputy City Manager Rick Naimark.

The Access to Care Ordinance can last only one year and is set to expire on Dec. 31, 2013. Phoenix would exempt certain hospitals, including government, specialty, small children’s and those that provide a significant percentage of care to out-of-state and Medicare patients.