Sun April 15, 2012
City's Health Care Tax Under Review
Residents of Kansas City have long financed public health, ambulance and indigent health services through a property tax which last year, brought in nearly $50 million.
Part of the tax is temporary, and a new mayor-appointed commission is taking a hard look at whether it should continue.
Growing Health Needs
The city has been subsidizing health services for decades, but area health leaders say the funds have been under great stress in recent years.
John Bluford, CEO of Truman Medical Centers, the once city-owned hospital, says the strain comes in large part from the recent economic downturn and changes to state Medicaid eligibility requirements in 2005.
“That has, in effect, eliminated a lot of people off the Medicaid roles,” says Bluford.
As a result, a lot more uninsured and underinsured patients who are unable to pay for care are coming to the hospital, neighborhood clinics and the health department. In 2011, those facilities experienced nearly 150,000 patient encounters, a 27 percent increase from 2009, according to the health department.
But health is not the only sector struggling with resources.
Growing City Needs
During his State of the City speech last month, Kansas City Mayor Sly James pointed to the city’s $600 million in deferred maintenance. The fire department is taking cuts. And with so many taxes dedicated to specific projects, like public safety, James said all must be reviewed right now to ensure money is going where it’s needed most.
“I have lived in Kansas City long enough to know that we seldom prepare for the loss of tax revenues,” James stated. “But rather, we work feverishly at the end of the time they’re about to expire to make sure they’re renewed. I am a Marine, and we used to call that “gunpoint” diplomacy. That philosophy has created a jumbled mess of revenue streams for which we are constantly seeking voters seeking renewal.”
Health Levy Under Review
Those revenue streams include a specific property tax called the health levy, designated for health services. One part of the levy is permanent, bringing in around $30 million a year, depending on property values. The other is a temporary 22 cent increase, which voters approved in 2005 and brings in another $15 million annually.
That temporary levy expires in two years.
“And you know the question with a temporary levy [is], should it be renewed,” says local businesswoman, Susan Stanton.
Stanton is head of the Citizen’s Commission on Municipal Revenue. Mayor James recently revived the commission after it was inactive for decades, and charged the group with studying Kansas City’s revenue needs.
Members recently pressed area health leaders on the health levy funds.
“We still have a major void, and that’s with an existing subsidy,” Truman CEO, John Bluford, who hopes the levy is renewed, told the group.
Truman gets about half of what the entire health levy brings in, or about $25 million. Bluford says last year, the hospital provided around $60 million in care to more than 20,000 Kansas City residents who were unable to pay.
Municipal Revenue Commission member, Tim Kristl, who was previously on the board of Northland Health Care Access, a facility that receives health levy funds, says the commission isn’t debating whether the care that local health providers deliver is important, but rather, whether the city should be financing so much of it.
“If they promised the voters in 2005 that it would be temporary, what things made it temporary and what things did they say they needed to study and consider during that period, and how well have they studied them?” says Kristl.
The federal health law is also starting to complicate the discussion. Kristl and other members noted if the Supreme Court upholds the law, thousands of more people will gain public and private health coverage starting in 2014, the same year the health levy is scheduled to expire.
Proponents of renewing the levy say that expansion will take years, and won’t be in place by the time the health levy sunsets. With regards to efforts to explore other revenue options, Bluford says at the time voters approved the levy increase, health leaders had hoped to pursue a possible regional tax. He says not much happened with that.
Dr. Rex Archer, director of the Kansas City, Missouri Health Department and a proponent of extending the tax in some form, says turning to the state hasn’t been an option. Its funding for health has been declining for decades.
“20 years ago, Missouri was in the middle of the pack of states with regards to health status of the population of the state. We’re now down to fortieth and continuing to slide,” says Dr. Archer. “Unless Kansas City wants to have the health status of the rest of the state, we have to continue to invest.”
A “Unique” Situation
Kansas City’s public private partnership for health services is in some ways unique, according to Dr. Archer. Neither Wyandotte County in Kansas nor St. Louis in Missouri has an equivalent health levy tax. But Bruce Siegel, president of the National Association of Public Hospitals and Health Systems, says many cities are active in supporting local health services.
“It is very common to have the local county or city funding the safety net provider in a community,” says Siegel. “We really see it from coast-to-coast.”
But Siegel says with more and more cities facing growing financial pressure, and with possible changes coming under the federal health law, places across the country are engaging in debates and conversations similar to what’s happening in Kansas City.
The Citizen’s Commission on Municipal Revenue plans to issue recommendations on the health levy and other city revenue streams next month. From there, the council and residents will have about a year and a half to figure out whether or not to put the levy up for renewal.
This story is part of a reporting partnership that includes KCUR, NPR and Kaiser Health News.
Follow KCUR health news on Twitter.