SADOW: The Sick Tax Would Cost Everybody

While already noted has been the potentially noxious impact of HB 532, a companion measure HB 533 also would create problems that would rob Peter to pay Paul, fleece taxpayers, and leave the state vulnerable to legal penalties.

HB 532 would lay the groundwork to recreate a “sick tax” levied on those admitted into hospitals that indirectly would be passed on to consumers. But it also would eliminate flexibility in reimbursement rates paid by the state to hospitals by locking them and guaranteeing adjustment upwards by inflation rate, removing completely the idea of payment on the basis of market conditions. HB 533 would extend this to other providers where payment is made for nursing homes, pharmacies, intermediate care facilities, medical transporters, and managed care organizations with Medicaid contracts. Exceptions to the automatic adjustments could be made in times of budget deficit as long as all other providers are cut similarly.

Were these constitutional amendments offered by House Speaker Chuck Kleckley to pass, this could commit the state to paying excess taxpayer dollars to fund these special interests, if the market rate went below the rate being paid. Worse, it leaves out one set of providers that is different from all of these: those for home- and community-based waiver services. This means in times of budgetary stress only these rates could be cut, or they could be cut at least as much as the other shielded providers’. In essence, this also would decouple the rates being paid from market considerations, as these rates now would be held hostage to external factors created by the inability to cut other rates or would have to be cut in concert with the others regardless of the market conditions affecting them.

Worst of all, this could open up the state to lawsuits that only cuts elsewhere in the budget or raising taxes could prevent. Louisiana public policy in the area of waiver provision, which has the state pay providers that allow the developmentally disabled or the infirm to live in the community or at home instead of being institutionalized, is guided by the federal Olmstead and state Barthelemy court decisions. This means the state must provide adequately for those who qualify to live in the least restrictive setting given their needs; it has no option.

If put in the position of cutting provider rates artificially low because of the lack of flexibility created by these amendments, this could contract enough supply as to begin forcing individuals into nursing homes (which in most cases cost the state more), in direct violation of the law. The only way then to prevent suits to make the state follow the law is for it to find the revenues to keep these providers’ rates at a level to provide adequate supply, and if it can’t be from cuts elsewhere, it comes from tax increases – directly, as because these providers don’t have nongovernment revenues the “sick tax” dodge can’t be used.

In other words, by giving all other providers the special privilege of locked-in rates that never go down – a recipe that encourages inefficiency in performance by them and in use of the public’s money – the state sets itself up for wasteful allocation subsidized by taxpayers who may have to give more than is necessary as a result. Unfortunately, to this point legislators seem blind to the consequences of approval of these, meaning the last resort would be the people defeating these amendments.

But as last year’s elections showed, ballot items can be worded innocuously enough to fool the public into thinking they are protecting health care when in fact they are creating more problems for it in exchange for satisfying a few special interests. Now, only the whole Senate can defeat these bills prior to a popular vote (the governor does not have any veto power over concurrent resolutions necessary to set up an amendment vote, perhaps why Kleckley and his mostly Democrat sponsors chose to try to put this verbose and unwieldy language in both cases into the Constitution rather than into statute, with the additional benefit it makes them harder to repeal). It should act to do so.



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