"Knowledge will forever govern ignorance

 and a people who mean to be their own governors

 must arm themselves with the power which knowledge gives."

Thursday, May 11, 2006

Hospital Taxes And Charity Care Costs

It looks as though Governor Corzine’s proposed $1,424 monthly tax on each hospital bed in New Jersey has been pronounced dead. The scheme was intended to raise $430 million, half to help pay for $1 billion hospitals lose each year in charity care, with the other half, $215 million, to have been diverted for unspecified purposes within the state’s budget.

The Corzine hospital tax met with stiff opposition on both sides of the aisle because while it would have applied to all hospitals, the proceeds would benefit only those hospitals treating the greatest number of nonpaying patients.

There are 25 hospitals that would benefit from the tax and 49 that would lose money, according to an analysis by the Office of Legislative Services. Overlook Hospital in Summit would lose the most, $6.5 million.

"This dog won't hunt," said Sen. Wayne Bryant (D-Camden), who ordered the state's health commissioner to come back next week with other ideas on how to generate revenue.

The governor's office had its own idea.

A spokesman for Gov. Jon Corzine shot back that if the lawmakers don't like the hospital "bed tax," they should come up with their own alternatives.
Sen. Barbara Buono (D-Middlesex) has done just that. She proposes raiding the reserves of the state’s non-profit insurers, such as Horizon Blue Cross Blue Shield of New Jersey.

"The first step may be to change the law in New Jersey," said Buono, who is expected to be joined by two other senators today in demanding a state investigation into whether Horizon has hoarded surplus to the detriment of uninsured residents and small business owners.

Buono said Horizon's charitable mission and favorable tax treatment give it an obligation to help fund state health care needs.
An insurance company may be nonprofit, but you can rest assured the people paying premiums to Horizon Blue Cross Blue Shield do not consider their payments charitable contributions. If premiums have been set too high to cover medical claims and prudent reserves, then any “surplus” should be returned to those overcharged and not confiscated by the state. Buono’s plan would amount to a tax on Blue Cross Blue Shield policy holders, not on non-profit insurance companies.

"Horizon spokesman Tom Rubino said its surplus is independently reviewed by experts and is necessary because its 3.2 million members file $9 billion in annual claims.

"Any action to raid Horizon Blue Cross Blue Shield of New Jersey's reserve would not only be illegal, but would weaken the financial security of the state's health care system," Rubino said..
In all of these discussions it’s curious no one asks for the Governor Corzine’s plans for the $215 million that was to be raised by the hospital tax, but not slated to be used for health care. The obvious solution is to cut $215 million from Corzine’s new spending proposals. Corzine would rather increase the cost of healthcare in New Jersey with a new tax than reduce spending within his bloated budget.

But, there are other questions never asked that need to be answered. Why are hospitals losing $1 billion a year to non-paying patients? The majority of the state’s residents have private health insurance, seniors are covered under Medicare, the poor and other low-income people are covered under Medicaid and NJ Family Care – who makes up the bulk of the nonpaying patient population?

We suggest the answer may very well be the estimated 300,000 to 500,000 illegal aliens living in New Jersey. The statistics provided by Horizon Blue Cross Blue Shield provides us with a tip-off. The insurance company’s average medical claim per insured is $2,813 - $9 billion in annual claims divided by 3.2 million covered by the company. One billion in charity care divided by the average claim ($2,813) brings us to an estimated population of 356,000 uncovered by insurance, a figure that matches the estimated illegal alien population in the state.

No one here is suggesting anyone, regardless of legal status, should be denied necessary medical care. We are suggesting the cost of illegal immigration in New Jersey needs to identified and rationally discussed – from education to healthcare. New Jersey has become a magnet for illegal aliens, while our neighbor Pennsylvania has not. Rather than figuring out new ways to tax citizens and raid trust funds, maybe it’s time to figure out how to reduce the number of illegal aliens straining the budget and taxpayer bank accounts.


At 8:00 AM, Blogger PN said...

The NJ Hospital Association estimates that NJ hospitals spend $250-300 million per year providing medical care to illegal immigrants.

You've also raised another interesting point. If NJ benefits for illegals are better than adjacent states, and therefore attract additional residents, we may be increasing our problems rather than solving them.

NJ Fiscal Folly

At 8:08 AM, Blogger PN said...


At 1:26 AM, Blogger Bob said...

What is the number of uninsured people in New Jersey not counting illegal aliens.

At 5:06 PM, Anonymous Jerald said...

Thanks so much for this article, quite useful piece of writing.


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