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Governor wants to forgive LBJ loan to pay Medicare
The LBJ Medical Center received a loan of $5 million from the American Samoa Government five years ago and now, Governor Togiola Tulafono says he plans to submit to the Fono an Administration bill seeking to write-off or forgive the loan, in order to free up funds to pay the $9 million the hospital owes to the Medicare Program.
The Governor revealed his intentions during his weekend radio program, in response to a caller who inquired about the Medicare debt and why it exists. Togiola explained that it had nothing to do with the misuse of federal funds, as rumored, - but instead, was an overpayment by Medicare to the LBJ hospital.
According to Togiola, LBJ must pay back what it owes to Medicare; otherwise, the local hospital will miss out on Medicare funding as well as other federal funding for the hospital.
The money needs to be paid, and there is just no other way around it, the Governor explained. He added that perhaps the most serious problem facing the hospital is the 12% interest rate which adds up to a large amount meaning, the debt needs to be paid off sooner than later.
(The hospital has been making monthly payments of $211K and as of last month, the total payments added up to a little over $1.2 million using operating funds and money earmarked for contingent liabilities).
Meanwhile, the Governor has rejected a revenue measure submitted by the LBJ which proposes to increase the current excise tax from 5% to 10% in order to get additional money to pay the $9-million-dollar debt.
Togiola rejected the proposal saying that such actions would become an added burden to local residents who are already trying to make ends meet as the cost of living continues to increase.
This isn’t the first time a request has been made to forgive the LBJ loan. Last year, the LBJ board made the request, saying that LBJ was already struggling to meet certain financial obligations and there were no funds set aside to pay it off.
Earlier this year, another request was made after a government report revealed that the $5 million remains a pending expense yet to be paid off by the hospital.
The loan was funded by the $11.6 million left over from the Hurricane Val insurance settlement. The money was used to pay off numerous LBJ debts including the US FICA and Medicare taxes, pharmaceutical company payables, employee and employer contributions to the ASG Employees’ Retirement Fund, utility payables, ASG withholding taxes, and other vendor payables incurred for essential operational services.
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