and the
Citizens Economic Research Foundation


Barbara's Column
July 2002 #2

Nursing home bed tax just another Beacon Hill scam

by Barbara Anderson

The Salem Evening News
Tuesday, July 09, 2002

Every now and then Beacon Hill does something that surprises even me, who has come to expect only the ridiculous, the venal, and the dumb from that source.

Yes, I admit I was astonished to learn about the nursing home and prescription drug taxes that are presently being considered in the House and Senate budget conference committee.

We have a nursing home shortage, with more threatening to close, and drug costs are very high. So our legislature's solution is to tax the nursing homes and add a tax to the prescriptions? This made no sense, even politically: Politicians don't usually try to see how much they can upset senior citizens.

So I decided to look for the real agenda and report back to you.

It turns out that the prescription drug thing is fairly typical: To the political brain, people who pay for their own prescriptions or have insurance, are "rich;" so someone must make them pay more for medicine to help those who can't afford prescriptions.

I will pause here to remind you that in Pennsylvania, a commonwealth with a much lower tax burden than ours, prescription drugs for the elderly cost only $6 each and are subsidized by the state lottery. Here in Massachusetts, we have other priorities: A pork bill passed recently that, among other things, renovates a government golf course in Weston.

Part of the nursing home tax carries with it the typical redistributionist ideology too -- an assumption that any old, sick, dying person who can pay for himself can darn well pay more to help subsidize someone else's care; while the state subsidizes -- pork bill again -- passive recreation trails and swamp cleanups.

Personally, I think we taxpayers should get our recreation by actively chasing the politicians who voted for these things down a passive recreation trail and into a swamp.

This column is too short for a complete explanation of the nursing home tax, but here's nuts in a nutshell:

There will be a really big Medicaid crisis as more of us, followed by the baby boomers, live longer. So instead of facing up to this fact, legislators merrily increase benefits and eligibility.

People who have no assets rely on state taxpayers to fund their care with Medicaid, and the federal government reimburses the state for half the cost. The state doesn't make paying its Medicaid bills a priority, so nursing homes often have a cash flow problem; but even without that, it costs more to care for elderly and disabled patients than the facilities get when the state's check finally arrives.

Seniors who saved for their old age and did not spend down their assets before entering a nursing home pay their own way in both private and mixed private/Medicaid facilities; they are not on taxpayer assistance. So of course the federal government doesn't reimburse the state for their care.

The majority in the Massachusetts House (The roll call was 107 for the tax, 43 against.) and Senate (Which is too cowardly to have a roll call.) decided to tax all nursing homes, whether or not they have Medicaid patients, for each privately-paid and Medicaid bed they have filled. The state then gives the Medicaid nursing homes nearly twice what they pay in the form of increased Medicaid rates, and then waits for the feds to return half to the state. The feds are dumb enough to do this -- though it should be noted that they are starting to see through this cute scamming of federal taxpayers and in some states, are now demanding much of the money back. I would think they would also be looking to indict the schemers, but so far none of this is against the law.

It is also legal to get rid of your hard-earned money several years before entering the nursing home either by taking a world tour or giving it to your kids for a nice vacation after your funeral. Certain kinds of lawyers specialize in helping you set things up so the taxpayers are stuck with the costs of your care -- until the whole system crashes and you become a bedless patient. You then hope your kids set aside some of your money to put the addition on their house for you and pay for some nursing assistance.

So there it is. Encourage private-payers onto public assistance in order to get more money from the federal government, and hang the national debt. With the Big Dig, Massachusetts gets more money from Washington than it sends, so the whole commonwealth is on welfare anyhow.

The good news: Not only taxpayers, but seniors and the media seem to be unimpressed with this latest Beacon Hill scheme. These two new taxes may be dropped by embarrassed legislators, but if they aren't, Gov. "No new taxes" Jane Swift should veto this, the dumbest idea to come out of Boston this year.

Barbara Anderson is executive director of Citizens for Limited Taxation. Her syndicated columns appear weekly in the Salem Evening News and the Lowell Sun; bi-weekly in the Tinytown Gazette; and occasionally in other newspapers.

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