AHCA proposes tax on HMOs

By Christine Jordan Sexton 
3/5/2010 © Florida Tribune

The massive state agency in charge of the state’s Medicaid program is proposing for the first time to tax premiums collected by HMOs as well as increase an already existing tax on Florida hospitals.

The move comes at a time when Florida legislative leaders say they will not pass any new taxes during this election year. But the secretary of the agency – who reports to Gov. Charlie Crist - came up with the idea as a one way to deal with potential budget cuts.

"These are only options that are available in these tough budget times," said Tom Arnold, the secretary of the Agency for Health Care Administration.

AHCA placed both tax ideas in a list it prepared at the request of Senate Health and Human Services Appropriations Committee Chairman Sen. Durell Peaden, R-Crestview. If the money was collected Arnold said it could be used to "buy back" some of the cuts on the list.

But the tax proposal has been quickly criticized by a number of lawmakers charged with crafting the budget.

"I am opposed to any tax on health care providers," said Sen. Don Gaetz, R-Niceville.

Rep. Denise Grimsley, R-Lake Placid, said it's not clear what the state will be doing with the $19 billion Medicaid program and she was reluctant to go so far as to say the options wouldn't be embraced. But she did acknowledge that taxing health care services isn't something she's fond of. "I'm not real warm with it,” she said.

While the assessment on HMOs would be a new tax, the hospital tax would be an increase. Hospitals already pay taxes on inpatient and outpatient revenues which are deposited into the Public Medical Assistance Trust Fund.

AHCA is advocating that the tax be increased by .5 percent, which doesn't sit well with the hospitals

“In a year when we are looking at corporate tax cuts, it seems counter intuitive to single out hospitals for a tax increase," said hospital lobbyist Jan Gorrie, who works for Buchanan Ingersoll & Rooney, PA.

The state already levies a tax on premiums collected by insurance companies that will raise an estimated $622 million for the current fiscal year. The existing tax on hospital revenues generates more than $400 million a year for the state.

There are 39 licensed health maintenance organizations or HMOs in the state according to AHCA's website. The majority of the people enrolled in managed care plans are businesses or individuals who enroll in commercial plans followed by Medicaid and Medicare patients. According to the latest Florida Hospital Association data there were 1.75 million people enrolled in commercial HMO plans versus just over 1 million people in Medicaid HMO plans.

The Florida Association of Health Plans represents plans that participate in the Medicaid program as well as commercial only HMOs. FAHP President Michael Garner said his association had not taken a position on the proposal. 

--Florida Tribune, a news service that covers the Capital, is at www.fltrib.com. This story is reprinted by permission.