Each year hospitals pay the state $135 million which, through some mysterious alchemy, morphs into the federal government paying the state a second $135 million (to care for Medicaid patients). Trying to decipher the magic a newspaper described a circular flow of money that seems to work like this:
1) The hospitals pay the state $135 million;
2) The hospitals then send the state $135 million in bills for caring for Medicaid patients;
3) The state then sends Washington the $135 million in bills;
4) Washington then sends the state a check for $90 million – its share of the Medicaid bills;
5) The state then returns the original $135 million to the hospitals;
6) And, finally, the state and the hospitals figure out how to divvy up the $90 million (from Washington) that’s left in the pot.
That arrangement rolled along fine (for everyone but Washington) until this year when Governor McCrory proposed the hospitals send the state another $15 million without getting their money back – which didn’t sit well with the hospitals whose lobbyist announced they were in such dire need of cash the Governor’s plan might leave ERs with no choice but to, with deep regret, turn away patients.
A Democratic legislator also jumped into the melee accusing the Governor of taxing ‘sick people’ – which was pretty much the end of any illuminating debate.
I asked a friend who’s served on his local hospital board, Are the hospitals really broke? and he said many rural hospitals – like his – are having a tough time making ends meet but the big urban hospitals – like Carolina’s Medical Center in Charlotte – own airplanes and helicopters and pay executives seven figure salaries (and don’t have to pay taxes on profits or pay property taxes).
Of course, it wouldn’t be correct to say not taxing a hospital is the same as subsidizing it but, still, being tax free is helpful – so can the hospitals afford to do as the Governor asks and pay another $15 million?
What we need is a little clarity.
If a hospital’s strapped for cash I doubt the Governor (or even the State Senate) would mind lending a helping hand but, if, on the other hand, a hospital owns an airplane or helicopter, maybe it ought to provide a bit of proof it’s broke as a church mouse.