AUGUSTA – On Monday, Gov. John Baldacci’s top health advisers and two Democrats offered hospitals an alternative to an $8.7 million cut: a return of the “sick” tax.

The so-called “tax-and-match” plan works like this: The state taxes hospital gross receipts, which allows Maine to draw more federal dollars. When it receives those federal dollars the state reimburses the tax to hospitals.

The bottom line is the “tax-and-match” would mean hospitals would get a $2.6 million cut instead of $8.7 million, said Sen. Michael Brennan, D-Portland.

The Maine Hospital Association didn’t like the idea. It wants any cuts to come from a pool of money being reserved to start up Dirigo, which on July 1 plans to sell affordable health insurance to small businesses and individuals.

The state used to tax-and-match hospitals, and most agreed “it was poor public policy,” said James Cassidy, president of St. Mary’s Regional Medical Center in Lewiston and chairman of the board for the Maine Hospital Association. “There’s no guarantee the match would be there,” Cassidy said.

Trish Riley, director of the Governor’s Office on Health Care Policy and Finance, acknowledged hospitals were treated unfairly and the state cut back on reimbursements in the ’90s. Since then the federal government has tightened rules “so the abuses of the ’90s can’t happen now,” Riley said.

Despite not having support from hospitals, Democrats and the administration plan to proceed with the idea, saying other states like New Hampshire and Rhode Island are also turning to taxing-and-matching.

– Bonnie Washuk