The Medicaid Enhancement Tax Study Commission will hold its second meeting this week. Unless you are a hospital management professional or a legislator or bureaucrat involved in state tax collections, you may never have heard of the MET tax. But its role in health care costs and its relationship to state distribution of funds to hospitals has an impact on all of us.
The MET is a 5.5 percent tax on the net patient service revenue of New Hampshire hospitals. Net patient revenue equals hospital charges for services less bad debt deductions, charity care and payment discounts. The tax was instituted in 1991 and it worked swimmingly for more than two decades.
Hospitals would determine the amount of money they owed. They would pay that amount but on the same day the state would send them an equal amount in the form of disproportionate share (DSH) payments for uncompensated care provided by hospitals. For hospitals, there was no gain or loss on the transactions so they did not dispute the application of the tax.
The state, however, was the beneficiary. It matched the money paid to the hospitals in DSH payments with federal Medicaid money. If $100 million was paid by hospitals in MET taxes, they were reimbursed $100 million in DSH money. But the state collected the federal government match of the DSH payments and put that money into the general fund.
From 1991 through 2012, New Hampshire took in $2.3 billion of federal Medicaid matched money and put it into the general fund. That is a lot of money and New Hampshire became dependent upon those funds and let’s face it, the federal money helped us avoid tax increases or cuts in state spending.
There have been recent changes in the program. First, the federal government did an audit and found that New Hampshire was wrongly putting Medicaid money into the general fund. The state paid a fine and had to revise how it reimburses hospitals. That was a hit to state revenue and some hospitals started to subsidize the program because they were getting less back than they paid in taxes
Secondly, the legislature took money from the MET tax and used it for state operations instead of using it to pay back hospitals. That was first done in the biennial budget that ended on June 30.
Then State Senator Jeanne Shaheen said in 1991, "(I) would hope that we will admit to ourselves this is really a silver-bail-out …this is a legal loophole, and we ought to go along with it. But it’s not going to ultimately solve the problems we are facing." Twenty-two years later those problems are in front of the Medicaid Enhancement Tax Study Commission.
Carole Alfano will depart the Senate in mid-September to become the public information officer for the state’s Judicial Branch. Carole, a lawyer and veteran communications specialist, has been a part of the Senate for much of my time there.
As one would expect, when Senate presidents change, they make appointments to positions like chief of staff, caucus and policy directors, legal counsel and communications director. The latter is the position Carole holds.
In addition to the appointments to key jobs, Senate presidents usually maintain the team of assistants to Senators and a couple of other support staff. The House Speaker has a similar staff and together the Senate and House oversee separate offices that support both the House and Senate. These joint operations include the visitors center, security, accounting, office of the legislative budget assistant and the office of legislative services (bill drafting).
When I was elected to the Senate, Carole Alfano was already there. She left in 2005 when Senator Ted Gatsas (now Manchester mayor) was elected president but returned again in 2010 when Peter Bragdon became president.
Senators are volunteers and must count on the help of the State House staff to be effective. In Carole’s case, she works for all Senators on a bi-partisan basis issuing press releases and managing media relations for the Senate overall or for individual senators. If readers see a photograph or news story in a newspaper or online, it is almost certain that the preparation and release of the story and photo started with Carole.
The Senate, like New Hampshire state government generally, is prudent about staffing. Senators share their assistants. In the suite of offices that I am, the Senate president and majority leader share an assistant. Three other Senators share an assistant. And my assistant, Nancy Nolin, helps me but also handles other administrative responsibilities and is the receptionist for the seven senators including the president in our office.
The staff of the Senate helps insure the smooth operation of the body. Our staff is dedicated and hard working, in some cases for decades of working in the State House, while others are recent college graduates. They are valued colleagues of the Senators they serve.
I have worked with Carole Alfano off and on for over a decade. This term her office has been next to mine. That proximity and years of experience working with Carole have allowed me to see her incredible talent at work. She will be missed in the State Senate and all Senators wish her well as she heads to her new office at the Supreme Court.
All of Bob Odell's Sunacom columns since August 4,
2008 are free to view in the Archives.