Civic Rent

Georgia, like a lot of government entities, is facing a shortfall in tax revenues. When the economy turns south, businesses and government alike have to deal with change.

There are differences.

When a business owner notices a drop in revenues that are beyond his/her control, they take action. They cut underlying costs. As a last resort they raise prices.

Government rarely cuts cost and has the ability to raise prices (taxes) with impunity.

If your local donut shop increases their price, there is always another one where you can satisfy your sweet tooth. But where are you going to get someone else to fill the potholes in your street?

Funding for Georgia's Medicaid and Peachcare (SCHIP) programs is off. Without additional funding, "thousands" will lose benefits. The state says they need an extra $112,000,000 to shore up the fund.

Where will that money come from?

HMO's.

Under the plan, a 3 percent increase would be added to premiums for HMO insurance. It remains unclear why the agency is singling out the HMOs; officials said that it is their interpretation of the federal law

How much comes in to state coffers as a result of premium taxes?

A lot.

For most states, premium taxes are the number 1, 2 or 3 revenue source.

So adding another 3% is no big deal, right?

The surcharge would yield $112 million, as well as a federal match of $90 million.

Medows said these HMOs should pay this “civic rent” to do their share in supporting the societal burden of helping the needy.

Civic rent.

Makes it sound almost palatable.

Of course insurance carriers don't pay taxes. Their policyholders do.

But what's another $112M, on top of the current state windfall of $143M in premium taxes? It's just your civic rent.