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Healthcare Sales Tax Heads for Ballot Box

Tuesday December 02, 2003

Berkeley voters will get to weigh in on a proposed tax hike this March after all. On the same evening Council withdrew a proposed parcel tax hike, the Alameda County Board of Supervisors voted unanimously to place a half-penny tax increase on the March ballot to bail out cash-strapped public medical facilities. 

The tax—which needs two-thirds approval from county voters—would raise the sales tax to 8.75 percent, catapulting Alameda County past San Francisco for the highest sales tax rates in state. 

County officials estimate the tax would generate $90 million annually, with 75 percent earmarked for the Alameda County Medical Center—whose budget deficit has exploded to $86 million from $45.7 million in June. 

The medical center provides care to the county’s indigent and uninsured and includes Oakland’s Highland Hospital—which serves the majority of Berkeley trauma and emergency patients and is the lone specialized medical care option for Berkeley’s estimated 9,000-11,000 uninsured residents. 

“This is a life-saving measure,” said Alameda County Director of Health Care Services Dave Kears. “We can’t sustain the system for long without some sort of government subsidy.” 

The medical center—which also includes Fairmont Hospital in San Leandro, John George Psychiatric Pavilion in San Leandro and three outpatient clinics—has seen its $353 million budget busted by funding cuts, expense increases and swelling ranks of the uninsured they are mandated to serve. 

“It’s important to understand these problems aren’t a case of bad management,” Kears said. “Most of this has been beyond anyone’s control.” 

Last year, 63,500 of the center’s 125,000 patients were uninsured. Coupled with increased expenses for employee benefits and drugs and reductions in government aid—including a $7 million cut from a federal program aiding public hospitals—the center has struggled to balance its books, said spokesperson Rachel Kagen. 

Two rounds of cutbacks earlier this year totaling $23.5 million resulted in 150 layoffs, closure of two outpatient clinics, increased patient co-payments as well as a call to deny non-emergency care to indigents. 

Kagen said implementing the policy denying non-emergency care has proven difficult because many doctors and staffers refuse to turn away patients. 

Next week the center will present county supervisors plans for $53 million in further cuts, including elimination of another 176 positions, ending all specialty care at outpatient clinics, and closing a cardiac ward and obstetrician services at Highland, a psychiatric ward at John George, and a nursing home at Fairmont. 

If the supervisors accept the plan, the center must still cut another $33 million to eliminate its deficit. Even with the sales tax revenues, Kagen said, he probably couldn’t salvage services already on the chopping block, though the funds could help sustain Highland’s emergency room and trauma center. 

The proposed tax hike—called the Essential Health Care Services Tax—would give center facilities autonomy in distributing the money and would not replace money the county already provides for indigent care. 

County supervisors have feuded with the center’s county-appointed board of trustees this year over the budget deficit. 

In July, after the supervisors reduced the authority of former CEO Kenneth Cohen—who they blamed for failing to implement cuts when revenues first started evaporating and then proposing cuts far too drastic—five center trustees voted to fire Cohen and then quit in protest, citing frustration with the supervisors. 

Supervisor Keith Carson said he hoped an independent financial audit due out next week will uncover possible savings to preserve services slated for the chopping block. 

“We’ve never had a line-by-line review of expenditures and revenues,” Carson said, adding that the estimated $86 million deficit could be lower if state reimbursements have not been received. 

To boost revenue, the center is seeking to improve services to attract insured patients, but two of the more profitable departments, cardiac and obstetrics, are slated for cuts. 

In light of the firestorm in Berkeley over a proposed parcel tax, Carson said the board would campaign hard for the tax measure and start a mobilization drive to get supporters to the polls. 

Voters have given mixed signals in recent years on their willingness to shoulder high sales taxes, passing a half-cent increase two years ago to pay for transportation improvements after rejecting it the year before. 

If the measure is passed, county supervisors promise to seek public input on which health programs to fund with the remaining 25 percent of the funds. 

Kears said a county Detox center—long sought by Berkeley homeless advocates— would likely be a top priority. 

Lifelong Medical, Berkeley’s care provider for uninsured residents, could also receive increased funds from the tax measure. Executive Director Marty Lynch said with fewer insured residents and less public money to pay for them, Lifelong has had to turn back 20-30 patients per week at its four clinics. 

Berkeley Director of Public Health Poki Namkung said city-run health centers across the state face similar problems, noting that if Gov. Schwarzenegger’s proposed 10 percent reduction in Medi-Cal reimbursements passes, the city’s three clinics stand to lose about $75,000—30 percent of its budget.  

The Alameda County Taxpayers Association endorsed the tax hike after learning it will sunset in 2019.