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The Bottom Line: Hospital Surcharge

Updated: Wednesday, March 20 2013, 01:55 PM EDT

ALBANY -- Paying for healthcare, by taxing healthcare.

That's essentially the premise behind New York State's little-known Hospital Surcharge.

CBS 6's Dori Marlin first got The Bottom Line on this in 2010, when viewers brought it to her attention.

Stu Ferguson and "Jeffrey" each told her why they had to go to area hospitals.

Neither had insurance at the time - so both were forced to pay the state surcharge, assessed on all hospital bills.

Today, it stands at 9.63% - something most people don't see because their insurance provider picks up the cost.

"The state has taken in alot more money than it needs to," says Sen. Betty Little (R-Queensbury).

Dori's most recent check with the State Division of the Budget found the fee will account for $2.8 Billion in 2012-2013.  That's up by $500 Million since she first uncovered it in 2010.

All that money - plus other revenue from the state's Health Care Reform Act - supports $3.2 Billion in Medicaid costs, $1.4 Billion in public health programs, and $792 Million in indigent care costs.

But the State Comptroller's Office has explained to Dori how many programs - previously paid for by the state's General Fund - have simply been moved to be covered by this revenue.

"The use of that funding has been expanded to dozens of different programs," says Deputy Comptroller Tom Nitido.

Even the longtime chairman of the Assembly Health Committee, Assemblyman Richard Gottfried, told Dori in 2010, "There is not alot of good sense, maybe not any good sense, in funding healthcare by taxing healthcare."

So Dori now re-visited the issue with him more than two years later to get The Bottom Line.

"What can be done so that we're not paying for healthcare by taxing healthcare?" Dori asked.

"To back out of that system, we'd have to find about $3 Billion in revenue somewhere," says Assemblyman Gottfried. "It would make sense to me to fund those programs through a broad-based tax based on ability to pay... As you might guess, I have a bill to do that - I'm hoping that in my lifetime we can get that enacted."

The Bottom Line: Hospital Surcharge

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