ATLANTA — Anti-smoking advocates and Georgia health care providers conducted a rally at the state Capitol on Monday to promote a proposed $1 per pack tax increase on cigarettes.

Representatives from WellStar Health System attended the rally with officials from the Georgia Hospital Association and the Georgia Alliance of Community Hospitals, along with members of advocacy groups such as the Campaign for Tobacco-Free Kids and the American Cancer Society.

Last week, the Campaign for Tobacco-Free Kids released a poll showing that 73 percent of 500 likely Georgia voters support the tobacco tax as a way to help cut the state’s budget deficit.

The tobacco tax, House Bill 39, introduced by Rep. Ron Stephens (R-Savannah), proposes raising the tobacco tax by $1 per pack. Georgia’s current cigarette tax is 37 cents per pack.

This bill is in opposition to Gov. Sonny Perdue’s proposed hospital tax, which places a 1.6 percent tax on patient revenues in hospitals and on the premiums of managed care insurers, as well as a 1.9 percent cut in the rate used to pay many physicians through Medicaid.

Through these taxes, Perdue hopes to fill a $608 million gap in Medicaid funding.

But WellStar President and CEO Dr. Gregory Simone says the tobacco tax is a better alternative to the hospital bed tax, and one that’s good for hospitals, patients and communities alike.

“Looking at it from two issues: No. 1, it’s a health care issue,” Simone said of the cigarette tax, “… the other reason that we’re interested in the cigarette tax is because the alternatives for raising money for the state are not good for the public.”

Simone said a 1.6 percent tax on patient revenue could cost WellStar about $16 million. Although Perdue’s proposal might give some money back to the hospitals in the form of a Medicaid rate increase, Simone and Susan Thompson, WellStar’s executive director of government affairs, say that money back is not a guarantee.

Thompson said because of various federal requirements the state would have to file an application to allocate some of the tax money back to the Georgia hospitals, which Congress then has to approve.

“There’s a risk for every hospital involved in that tax scenario, so there’s just no guarantee that those dollars will come back as they think they might,” Thompson said.

As it is now, Medicaid, a program that provides health insurance to low-income residents, is funded 60 percent by the federal government and 40 percent by the state. Every dollar that is generated by the state for Medicaid is matched by $3 from the federal government.

Thompson said the tobacco tax would work exactly the same way as Perdue’s proposed hospital bed tax. And according to a recent study by the Campaign for Tobacco-Free Kids, the cigarette tax would garner $354.5 million in annual revenue for Medicaid. Couple that with the federal match and the state would generate an annual total of around $1 billion.

If the hospital bed tax doesn’t pass, rumors of reducing Medicaid funding by up to 16 percent are also swirling around the Capitol.

Simone said even a 10 percent cut would be detrimental to the WellStar community, which could also lead to a $16 million loss – a loss that has no hope of being returned.

“The thing about it is that most people forget the fact that we’re a nonprofit organization. Every dollar we use for the community benefit,” Simone said. “… So what that really means then is that when these taxes or cuts go into place, those are dollars that the community loses. It’s our community that’s putting these dollars up and they’re being taken right back out of our community.”

Simone said Medicaid patients account for 12 to 13 percent of WellStar’s total annual revenue, which makes it the third largest Medicaid provider in the state. These patients cost WellStar about $32 million per year.

“So there’s already essentially, if you will, a tax on caring for the Medicaid population,” Thompson said. “So if you add that hospital tax on top of it, that just increases the losses that we carry serving Medicaid patients.”

Monday’s rally brought out more than 100 health care providers and community members advocating for the cigarette tax. Last week, Thompson said she believes that support is growing.

Simone said, “You know, mostly, the legislators don’t want to raise taxes. While I agree with that, we don’t want to raise taxes, but when they made that kind of promise to themselves and to our state, it was a different time … I think we as the voters have to give them a break and say, you know what guys, we know you don’t want to, but we also know that sometimes you have to make those changes.”

A tax opposition group, Americans for Tax Reform, will be holding a rally today at noon on the Capitol in response to Monday’s rally and opposing both the cigarette tax and the hospital bed tax. Grover Norquist, founder of the Washington-based group, will be the rally’s keynote speaker.

A spokesman for Americans for Tax Reform said the group has opposed cigarette tax increases throughout the nation and sees them as a placeholder for further tax hikes.