ALBANY-- Area hospital officials, banding together against Medicaid cuts, propose lawmakers take a hard look at other options.

Gov. Sonny Perdue's proposed increase in cigarette taxes from 12 cents to 58 cents is a start, they said.

A smoker will spend $7.22 per pack of cigarettes in direct medical care costs, according to a Centers for Disease Control study. There's a whopping difference between $7.22 and 12 cents.

"You and I are making up that difference out of our pockets," said Dr. Mark McCollough, Phoebe Putney oncologist and chair of the Georgia Alliance for Tobacco Prevention.

The tax proposal is a win-win-win situation, McCollough said. It would save lives, save health care dollars and restore the state coffers.

Smoking can be reduced 10 percent if a higher tax is levied, he said. Young smokers are most price sensitive and will be less likely to pick up the habit.

The average smoker loses 14 years off his life, he said. Perdue's proposed tax hike would prevent the premature death of 25,000 people.

"It's time we let the true cost be reflected in a pack of cigarettes," he said.

In addition to increasing cigarette taxes and taxes on other tobacco products, the 15 hospitals represented at a press conference Wednesday at Phoebe Putney Memorial Hospital in Albany, want to see the some of the state's tobacco-settlement money temporarily routed to healthcare alone.

Currently, one-third of Georgia's award goes to economic development through OneGeorgia. OneGeorgia's 2003 settlement proceeds is more than $65.4 million, according to financial records.

"If we were to pull the amount (from Medicaid) proposed by the present administration out of the budget, we would shrink the economy of Georgia close to $1 billion just with that one fell swoop," said Ken Beverly, president of both Archbold Medical Center and the Georgia Hospital Association.

Redirecting settlement money into healthcare is what the settlement was intended for and would still serve as economic stimulus by saving hospitals -- which are often major employers in rural areas, the hospital officials said.

Another alternative would be to cut pharmaceutical costs, the largest single category of Medicaid expenses, Beverly said. The officials recommend a state-level rule requiring physicians to prescribe generic or lowest-cost drugs to Medicaid patients.

Officials also would like lawmakers to consider sending diverted federal healthcare money back to hospitals.

Under federal law, Georgia hospitals that provide the most indigent care have been allowed to temporarily transfer funds to the state to attract additional federal matching funds under the state's Upper Payment Limit program.

Millions of dollars each year in UPL are supposed to go to hospitals to defray costs, but under the Barnes administration, 83 percent of the federal matching UPL funds were directed to other state programs, the administrators said.

They want the state to aggressively pursue more funding under the Upper Payment Limit program. After a 33 percent cut in the program, the federal government is considering making "transition funding" available for several years to soften the blow.

And finally, the officials want to expedite federal anti-terrorism funds to help hospitals improve their ability to cope with an attack.

The front line of bioterrorism is community hospitals, Beverly said.

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