How a bill to eliminate cash assistance for disabled Pennsylvanians turned into ‘Faustian’ budget dilemma

By: - June 21, 2019 7:24 am

Members of the Poor People’s Campaign called on lawmakers to increase the state’s General Assistance benefit at a rally in the state Capitol. (Capital-Star photo by Elizabeth Hardison)

A repeal of the General Assistance program, which provides small cash payments to adults with disabilities, people in treatment for addiction, and other vulnerable populations, passed the House on Wednesday, 106-95.

But the bill does more than just eliminate cash assistance.

As amended on Tuesday, the bill now appropriates $16 million for a program that incentivizes nonpublic nursing facilities to provide services to seniors on Medical Assistance. 

Even more crucially, it also extends a Medicaid-related tax on hospitals that will funnel a projected $110 million into Philadelphia’s hospitals and the city’s coffers. Another $60 million, according to a House fiscal analysis, would go to the state’s General Fund.

Since the 1980s, the federal government has allowed states to tax certain types of hospitals based on revenue collected from patient stays to cover shrinking Medicaid reimbursements to care providers.

The federal government then matches the revenue collected by the state. The state can put some of those funds in its general budget, while the rest is used for Medicaid-related expenses.

“Because of that match, it creates a win-win for both states and providers,” said Jeff Bechtel, senior vice president of health economics and policy at the Hospital and Healthsystem Association of Pennsylvania.

There’s a statewide Quality Care Assessment, as well as one specific to Philadelphia.

In the current fiscal year, the Philadelphia hospital assessment has generated $147 million, according to the state Department of Human Services.

“In accordance with the Human Services Code, some of the revenues from the assessment are used by the city to support operations of their public health clinics,” Erin James, a Human Services spokesperson, said by email. “Remaining funds are transferred to the department for use in two areas. First, DHS uses some of the revenues to make supplemental medical assistance payments to hospitals. DHS also uses some of the revenues generated to fund existing payments to hospitals.”

Since it was first enacted in 2009, the Philadelphia hospital assessment has had a sunset date, meaning the General Assembly must reauthorize the program.

The current sunset date? June 30, the same day as the budget deadline.

The bill to eliminate General Assistance was amended Tuesday to reauthorize the program for another five years. It also would “increase revenue generated through the assessment to $200 million annually beginning in [fiscal year] 19-20,” according to James.

In a live radio interview with WITF, Gov. Tom Wolf called the move a “smart tactic” by Republicans, who have made eliminating General Assistance priority No. 1.

Philadelphia’s House Democratic delegation — made up of 24 lawmakers representing the commonwealth’s largest city — has led the charge against the elimination. They sent a letter to Wolf on June 10 urging a veto of any legislation that eliminates the program.

“The sobering truth is that the individuals who receive these benefits need so much more help than we can give,” the letter reads. “Therefore, we must do all we can to keep them from harm.”

That’s why adding the reauthorization of the assessment creates such a tough choice for Democrats and Wolf.

Rep. Matt Bradford, a Montgomery County Democrat who co-chairs the Appropriations Committee, described the amendment as “Faustian bargain.” After the Wednesday vote, he said he didn’t consider the move a negotiating tactic.

“They’re trying to make it hard for Democrats and people of conscience to vote against it,” Bradford said. “What they saw is Democrats aren’t going to find themselves pitted against poor folks and vulnerable committees.”

Other Philadelphia Democrats said they had no knowledge of the assessment, or any expansion of it, being used as a bargaining chip in budgetary negotiations before Tuesday’s committee vote.

This tactic may feel familiar to lawmakers and Capitol watchers.

When Gov. Tom Corbett and the Republican-led Legislature eliminated General Assistance in 2012, they did so by tacking language on to a bill that also reauthorized a similar assessment program that generated millions of dollars in revenue.

The Pa. Supreme Court in 2018 ruled the General Assembly had not considered the bill on the number of days required by the Constitution. Justices also rejected the argument that there was a “unifying subject” of the bill, as required by law. 

“This proposed subject [‘the regulation and funding of human services programs’] is entirely too expansive, as it involves a wide panoply of human service programs,” the justices wrote.

“It should be challenged,” Rep. Jason Dawkins, a Philadelphia Democrat who chairs the city’s delegation, told the Capital-Star. “It should be struck down.”

Capital-Star Associate Editor Sarah Anne Hughes contributed reporting. 

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Stephen Caruso
Stephen Caruso

Stephen Caruso is a former senior reporter with Pennsylvania Capital-Star. Before working with the Capital-Star he covered Pennsylvania state government for The PLS Reporter.