Many health care firms looking to erect new medical facilities face a fat tax hike under Gov. Andrew Cuomo’s $178-billion budget plan.
The proposal will slap health care providers with a new 3 percent surcharge — on top of the current .55 percent fee — to win Albany’s OK to construct new hospital facilities, nursing homes, diagnostic treatment centers, ambulatory surgery centers and other clinics
Cuomo is trying to close a projected $6 billion shortfall in his spending plan, and the proposal is an effort to generate $70 million in revenue.
Firms seeking to start or open new medical facilities cannot do so unless a “certificate of need” application is approved by the state Health Department.
But health care advocates and analysts said the 3 percent surcharge is a sick tax that should be rejected.
“This does not seem to be fully thought through. In the Public Health Law, ‘hospital’ is a broad term that includes not only things we ordinarily call hospitals, but also community health centers, clinics, nursing homes, etc,” said Assembly Health Committee Chairman Richard Gottfried (D-Manhattan).
“There are some wealthy hospitals that could afford to pay an extra $3 million for approval of a $100 million project. But there are many for which this fee would be a serious burden and hardship, especially facilities heavily dependent on Medicaid,” added Gottfried.
New facilities that are totally dependent on state funding will be exempt from the tax.
Other health care providers will be barred from seeking reimbursement from Medicaid, the government health insurance program for the needy, to recoup costs for the tax.
Imposing a hefty tax hike on medical construction is a prime example of why New York has among the highest health care costs in the country, said one health care analyst.
“It seems like the last thing we need is to add 3 percent onto every healthcare construction project in New York State,” said Bill Hammond of the Empire Center for Public Policy.
“I don’t know what their goal is other than just raising money … Some of these applicants are going to be very well-heeled institutions and will be able to pony up and for others it’ll be a significant burden, and it seems like it’s gratuitously adding to the cost of healthcare.”
Cuomo’s office defended the huge hike.
“It has been a decade since the State adjusted this fee for supporting administrative costs at the Department of Health, including oversight of the construction associated with nearly $4 billion in State capital investments to support these institutions, and this 3 percent adjustment simply aligns the structure to recognize operational expenses associated with this significant investment,” said Cuomo budget division spokesman Freeman Klopott
Applicants of current Certificate of Need proposals must pay an administrative fee up to $2,000 and the .55 percent fee on project costs.
The proposed medical tax hike comes as Cuomo and lawmakers grapple to close a $4 billion deficit in the Medicaid program.
The governor wants to force New York City and other counties to pick up the tab of Medicaid cost increases of more than 3 percent.
He’s also reconvening a task force to come up with recommendations to slash Medicaid spending by $.2.5 billion by April 1 — the date the 2020-2021 budget must be approved by the Legislature.
