By State Representative Jarrod Martin
As you may be aware, Ohio faces incredibly important fiscal decisions as an $8 billion budget deficit looms in the next year. With 10.5 percent of Ohioans unemployed and thousands of jobs lost in the past 12 months alone, it is important that lawmakers in Columbus be focused on finding long-term solutions to our state’s budget problems.
House Bill 1, the biennial budget for 2010-2011, included a new hospital franchise fee, which raised taxes on our health care sector. According to the Ohio Hospital Association, this fee will generate approximately $718 million for the state.
Approximately $575 million of the new hospital franchise fee will be reimbursed to hospitals. To correct the disparity between these two figures, Ohio’s hospitals are responsible for about $150 million in new fees. This new responsibility has caused many of Ohio’s hospitals to cut jobs, reduce services, or delay expansion projects.
Hospitals are an important presence in Ohio, as they are among the top employers in the state. They represent a growing sector within the economy at a time when this sort of economic expansion is scarce. As a growing sector, hospitals also generate crucial economic activity. In fact, they are one of the major drivers of Ohio’s economy and provide much-needed jobs for many communities.
The new hospital franchise fee attempts to balance the state’s budget by drawing from Ohio’s hospitals. The goal is to decrease the deficit, but the consequences of this tax must be noted. It has the potential to affect job creation efforts and the welfare of Ohio’s families for years to come.
I am concerned that this hospital tax will not be an effective way to raise revenue for the state. It creates a palpable strain on the health care system. In addition, it adds pressure to Ohio’s taxpayers, as it asks them to take on the duty of balancing the budget.
As a solution, Representatives Terry Boose and Troy Balderson have introduced House Bill 497, which aims to minimize the hospital franchise fee. The proposed bill would subtract the cost of uncompensated care from the tax base, as well as Medicare and Medicaid costs. It would also reduce the tax base from 1.61 to 1.5 percent. These courses of action would follow the recommendations from the Ohio Hospital Association.
By relieving hospitals of taxes on the free services they provide, hospitals could save millions of dollars. This money saved could be used to pay their employees, renovate facilities and maintain stellar service to Ohioans. Ensuring a consistently outstanding health care system promotes the well-being of both the citizens of Ohio and the state’s economy. House Bill 497 is a step in the right direction toward rebuilding our economy and making Ohio a great place to work, live and raise a family.