Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, January 21, 1992 TAG: 9201210342
SECTION: EDITORIAL PAGE: A-7 EDITION: METRO
SOURCE: By L. DOUGLAS WILDER
DATELINE: LENGTH: Long
PROFITEERING PROVIDERS
TWO YEARS ago, Virginia's Medicaid budget required $1 billion. By the end of this biennium, it will require $1.9 billion. That is an increase of almost 100 percent - and that is unacceptable.The program is growing faster than the state government's ability to finance it. For the upcoming biennium, Medicaid will grow $743 million and will require a 31.2 percent increase in general funds, at a time when total general-fund growth is projected to increase only 3 percent. Virginia must deal with the explosion of this program's costs. The only sensible option is for health-care providers to pay a share of the program.
I have proposed a levy against the gross receipts of hospitals, nursing homes and pharmacies. It would be applied to the gross receipts after subtracting the providers' bad debts, charity care, Medicaid and Medicare revenues. These deductions acknowledge those providers who serve the poor, elderly and disabled.
There are several issues to consider when weighing this proposal. First, there is the issue of fairness. Due to the state of the economy, we are not able to provide a pay increase for state employees this year - but, at the same time, the federal government requires us to grant automatic salary and inflation adjustments to Medicaid hospitals and nursing homes. Federal law precludes states from holding the line on rates - even when the economy is hurting.
Also, recognize that providers benefit from federal Medicaid dollars, and will continue to do so. Under our proposed Virginia Health Services Provider Financing Act, their contributions will be used to match federal Medicaid dollars, and all this money will then go back into their own industry. No one else who puts dollars into the treasury not only gets back their dollars but has them doubled.
There will be no adverse impact on health care to our citizens or the economic stability of the health-provider community under our proposal. While there has been a steady drone that the provider tax will be passed on to consumers and the business community, this will not happen and should not happen. The legislation will prohibit it.
The health-care industry will have a profit margin of more than three-quarters of a billion dollars in the next two years. Yet, medical providers - with high-priced lobbyists, scare tactics and catchy slogans - are trying to sway the legislature into freeing them from a responsibility to ante up their fair share.
Instead, they've recommended raising taxes for all Virginians. They have dubbed our proposal a "sick tax." The providers are putting up a smoke screen to hide the real issue. They expect that if they say "sick tax" loud enough and long enough, legislators and the public will believe them.
Shared financing is not a "sick tax," but a tax on profits and a message that the commonwealth wants health-cost containment and wants it now. All we are asking for is a fair share. We are asking that health-care providers pick up some of the costs of Medicaid at a time when their business is booming and our commonwealth's revenues are flat.
There is really only one question: Why can't the health-provider community reduce future operation costs by one-half of 1 percent?
During my administration, state agencies have had to cut costs by up to 25 percent, so we've become experts in streamlining. Here are a few ideas we've come up with that will help health-care providers hold down their future operating expenses by one-half of 1 percent:
Slow down the medical "arms race," the proliferation of expensive but under-used equipment.
Improve hospital-bed utilization that currently averages about 57 percent capacity statewide. Excess beds mean excess cost!
Trim back the flood of fancy brochures hawking providers' wares.
Cut back on slick advertising asking our citizens to, say, consider psychiatric care if their teenager's room is a little messy or their child becomes a little moody.
Stop charging hundreds of dollars for two- to three-minute consultations with patients.
Scale back layers of mid-management and administrators.
Slow down the recruiting wars and bidding for professionals. This competition has driven up hospital salaries 6.7 percent in the past year while salaries in almost all other industries remained flat.
Scrutinize the growth of top-executive salaries and benefits - many of which now average $150,000 to $200,000 a year.
Simplify the confusing duplicative billing that no one can understand without a lawyer and an accountant.
Stop charging $5 for an aspirin. Stop charging $300 rent for a walker that can be purchased at the drug store for $50.
Stop charging $11 for a hospital-admission kit worth $2. Stop charging $10 for 34-cent surgeons' gloves.
And trim back on the posh salons and furnishings that have turned some hospital units into resorts.
It's time the medical community woke up and recognized the fact that we face a crisis. While more and more Americans lost health-care coverage over the past 10 years, and businesses became more burdened with health-insurance premiums, the health-care industry thrived with double-digit annual growth throughout the decade.
We are living in a new era, when government must be efficient, and when those who benefit from public money must be more accountble to the public. The days of selfish interests in government are over. If your position stands in opposition to the public good, then the public would be better served without you.
If the shared-provider-financing legislation is not passed, what will we say to all the state employees, teachers and faculty who are not scheduled for a pay raise and now will have to pay more for basic health care? What will we say to the almost 1 million Virginians who cannot afford health insurance? To the parents of thousands of mentally disabled Virginians who are waiting for expanded community housing and day programs? What will we say to those thousands of elderly Virginians currently on waiting lists for home-delivered meals and in-home support?
Failure to adopt the legislation would send a message to these citizens that their needs are less important than maintaining health-care provider profits, and that once again big money has won out over the people.
I would rather face down as many expensive lobbyists as the health-care community can muster than to tell one Virginian in need of care that we cannot provide care.
L. Douglas Wilder is governor of Virginia. This was excerpted from a speech he gave recently to the Virginia Health Care Commission.