By Rep. Lynne Ober (R-Hudson)
Vice Chair of the House Finance Committee
Last February Governor John Lynch presented his budget and made a detailed budget address. Now weeks later after the legislature has adopted much of his proposals, lawsuits have been filed and words are flying.
In his budget address, Lynch explained why he was cutting $250 million in uncompensated care to hospitals. In fact a recent editorial in the Manchester Union Leader said that Lynch “gave a long explanation of why it was a great idea to reduce the operating budgets of New Hampshire’s hospitals,” and indeed a review of his speech shows that this is true.
Much of the uncompensated care money that is no longer going to urban hospitals after the Lynch proposal has instead gone to offset a significant drop in enhanced federal Medicaid funds that stopped with the end of the stimulus. Without a doubt one issue with programs such as the Obama Stimulus Funds is that they are a one-time payment, but needs often continue. With the loss of those dollars, Lynch looked for other revenue to continue to help New Hampshire’s neediest residents.
Waiting until the last possible day to present his budget, Lynch during his February 15th budget address talked at length about the need to cut a lot of money from the Health and Human Services budget, but explained that he been unable to find cuts that would not hurt the neediest New Hampshire residents until he latched onto the idea of cutting uncompensated care.
“So we chose a third option. We are redirecting $20 million in uncompensated care payments the state now makes to hospitals to help maintain Medicaid optional services,” said Governor Lynch. At the time those in his party applauded while others waited for the next sentence.
In Lynch’s opinion hospitals provide essential medical care, “but from a financial perspective, the hospitals can afford this change.” Now that the budget has been passed, it is clear that Lynch did not have the backing of the hospitals for this nor are they willing to lose their revenue without a fight and so the lawsuit has been filed.
“Hospitals get millions of dollars in tax breaks for being nonprofits. But according to their latest public filings, the top 200 executives of our 24 nonprofit hospitals made a collective $60 million,” said Lynch. Published facts will show that this is true. Lynch then went on to state, “Collectively, New Hampshire’s nonprofit hospitals generated cash over their expenses of more than $200 million.”
Although hospitals run open public restaurants as well as offering medical care, they are also exempt from the Rooms and Meals tax paid by any other eatery. Lynch felt that hospitals could participate with revenue sharing. He contended, “Instead of using that excess cash to reduce health care costs, hospitals spend it on advertising, trying to attract market share from each other; on buying physician and laboratory practices across the state, and then increasing overhead charges to patients.”
At the time Lynch made it clear that he felt hospitals had $200 million in excess revenues they didn’t need, and were spending another $500 million on unjustified new construction because he also proposed a moratorium on additional hospital construction. When Lynch’s budget went to the legislature, they agreed with much of the Lynch proposal on uncompensated care, but did not reduce $51 million in uncompensated care payments to rural critical care hospitals where there is little competition of medical care.