For years, the Medicaid Enhancement Tax generated just under $100 million annually for the state’s general fund. The revenue is credited in November. Instead of taking-in the predicted $97 million in MET revenue last month, the tax brought to the general fund just $46.7 million. That creates a hole in the budget on the revenue side of $50.3 million.
The MET was created two decades ago as a 5.5 percent tax on hospital "net patient revenue" which is a generally understood measure of the business of hospitals. Parallel to collecting the annual tax, the state paid hospitals an equivalent amount of money to cover some of their costs of providing uncompensated care.And very significantly for the state, the federal government matched on a 50-50 basis the state’s payments for uncompensated care.
In Friday’s Department of Administrative Services’ NH Revenue Focus, a monthly report on state revenue, there was this note: "Medical Enhancement Tax receipts are lower than plan (the state revenue plan) due to the reporting by hospitals of significantly lower than expected net patient service revenues and the fact that some hospitals have yet to file."
There are some hospitals that have not reported, but that revenue will likely bring in possibly $10 million which will leave still us with a $40 million revenue shortfall.
Senator Chuck Morse (Salem) is chair of the Senate Finance Committee and I am chair of the Ways and Means Committee. The two of us have spent an extraordinary amount of time on the MET as well as the payment plans to hospitals for uncompensated care. We have called a joint meeting of our committees for this week to have the Commissioners of the Departments of Health and Human Services and Revenue Administration explain how projections of $97 million in revenue made in May are off by $40-50 million just a few months later.
The MET shortfall was headline news in many papers around the state on the weekend. I hope the headline writers stay with this story as we get into the technical and policy details of why we are so far off budget with this revenue source.
Without the revenue shortage from the Medicaid Enhancement Tax, the state would be about $5 million ahead of the budget plan through the end of November. Business taxes are 9.7 percent above budget plan which is very significant as those taxes are the state’s largest revenue source.
My office for four years was on the first floor of the State House. Right next to my office was the Donn Tibbitts Room, the press room named for the legendary State House Bureau Chief for the New Hampshire Union Leader. He worked in that room for a quarter of a century.
A few days ago one of Donn Tibbitts successors finished up his last "Under the State House Dome" weekly column for the Union Leader and headed off to a new job. Tom Fahey has been the State House chief reporter for New Hampshire’s largest paper during most of the time I have been in the legislature.
He is an experienced journalist starting his career back in the late 1970s working at the Journal Opinion, a paper that covered the small towns from Thetford, VT north on both sides of the Connecticut River.
When he joined the Union Leader, he covered business in New Hampshire. He reported on the bank failures and the high tech boom and bust along with the deregulation of Public Service of New Hampshire. These were complicated issues and demanded special skills to get the story right and deliver key information to interested readers.
The press plays a major role in keeping our democracy intact and effective. Our founding fathers saw this when they integrated freedom of the press into our constitution.
In New Hampshire, the State House reporters, both electronic and print, do a great job.
Issues like Medicaid funding as seen in the top few paragraphs of this article are complicated. But reporters like Tom Fahey glean information from documents, public meetings and one-on-one interviews to piece their stories together. Tom told me he tried to answer the questions that readers had and keep readers informed as details of stories emerged.
In years past, many newspapers kept a fulltime reporter at the State House. Today there are just three desks for the Union Leader, Nashua Telegraph and the Associated Press. The writers from those organizations and others who cover the State House are part of the stability of the New Hampshire political and legislative process. The press is there even as elections come and go, as leaders rise and some fall, always bringing the stories to readers and listeners.
Tom Fahey was one the best to work in the Donn Tibbetts Room and will be missed in the corridors and committee rooms of the State House as we make news in the months and years ahead. I wish him well in his new career.
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