A $75 million surprise delights the governor

Maryland's ploy to squeeze millions of dollars from the federal Medicaid program through a bogus tax on doctors paid off big time yesterday, bringing the state its first bit of good budget news in months.

Gov. William Donald Schaefer announced that the federal government had finally relented after months of opposition and agreed to reimburse Maryland $75 million for its controversial Medicaid "provider tax." That figure is almost all the state had originally hoped to collect and about $25 million more than it had counted on for this year's budget.


The governor used the occasion to praise both 2nd District Congresswoman Helen Delich Bentley and President Bush, saying that without their intervention the state might never have received the money.

Schaefer said that at least $5 million of the unexpected funds will be used to restore, at least in part, two recently curtailed Medicaid programs. One pays for in-home attendants for people with chronic illnesses or disabilities. The other helps patients get transportation to doctors' offices, clinics or hospitals.


The rest of the unexpected $25 million will be used to offset deficit spending by state agencies that deal with juvenile delinquents and prisons and as a hedge against another dip in state tax revenues, said Deputy Budget Secretary Frederick W. Puddester.

The state is already trying to eliminate a current year deficit of as much as $450 million.

The Medicaid provider tax was first proposed in the 1991 General Assembly session by Health Secretary Nelson J. Sabatini as a legal way of leveraging more federal aid to Maryland.

The scheme called for the state to add a tax to the bills it receives from doctors seeking Medicaid reimbursement. But the state never intended to collect the tax from the doctors. The tax was added merely to inflate the cost of the Medicaid program to the state, thus allowing the state to claim a higher matching reimbursement from the federal government.

Federal health officials -- and even some Maryland legislators who voted for the plan -- criticized it as a flim-flam. Twenty states ultimately enacted such tax schemes, but the federal Health Care Financing Administration and the Office of Management and Budget refused to send states the matching money.

Congress finally intervened last November, passing a law that essentially sanctioned the provider taxes then in effect. Still the federal bureaucrats balked. Maryland became the last of the 20 states to be reimbursed, and only after Mr. Bush and Mrs. Bentley intervened, Mr. Schaefer said.

Mr. Schaefer, a Democrat but a longtime friend of Mrs. Bentley's, praised the Republican representative's past work on behalf of the Port of Baltimore and warmly endorsed her, saying, "I think Congress is better off because Helen is there."

He spoke sympathetically of Mr. Bush, saying he is sorry that the Republican president has been receiving such "unfair" treatment in the press. He said Mr. Bush has been helpful to him on many occasions, and called him "a man of compassion, a man I admire."


Asked if that was an endorsement, the governor replied, "You don't turn your back on a friend."