PRESS RELEASES
PRESS RELEASE
For Immediate Release
Monday, December 29, 2003
MNCARE PROVIDER TAX GOES UP:
Much of increase used to balance state budget
(St. Paul, Minnesota) - Minnesota's tax on health care services will increase
by 0.5 percent on January 1, 2004. More than $1.6 billion has been collected
since the MinnesotaCare provider tax began in 1993.
"The provider tax is a tax on patients. Patients pay through higher costs for
care or less access to care. The provider tax has increased the cost of health
care in Minnesota and made doctors less interested in coming to or staying in
Minnesota," says Twila Brase, president of the Citizens' Council on Health
Care (CCHC).
TAX INCREASE: The tax is paid to the State primarily by hospitals and
practitioners. Expected increases in provider tax revenue as a result of
returning the tax to 2 percent are as follows according to the MN Department
of Finance:
2004:$23.8 million 2005: $82.2 million 2006: $90.1 million TOTAL: $196.1
million
FUND TRANSFER: The increase will not necessarily be used for health care. At
the end of the 2003 session, Minnesota legislators used the provider tax to
balance the State budget. Provider tax revenues are held in the Health Care
Access Fund (HCAF), which will also receive an additional $82.9 million from
reinstatement of the 1 percent premium tax on HMOs. The Department of Finance
November 2003 Forecast explains the transfer of tax dollars out of the HCAF:
"At the end of each of fiscal years 2005, 2006, and 2007, HCAF balances will
be transferred to the general fund in a dollar amount not to exceed the
figures noted here":
2005: $192.4 million 2006: $ 52.9 million 2007: $ 59.1 million TOTAL: $304.4
million
"The provider tax is feeding a slush fund. Do patients really want a tax on
health care to be used to fund K-12 education, higher education, and
construction?" asks Brase.
HISTORY OF TAX: The MinnesotaCare provider tax became law in 1992 as a
funding mechanism to transition Minnesotans to managed care and to expand
Medicaid (the MinnesotaCare program). The tax was first collected in 1993,
starting with hospitals. Physicians, dentists, and other health care
professionals began to pay the tax in 1994. Originally at 2 percent, the tax
was reduced to 1.5 percent in 1997 when legislators found it to be collecting
more than necessary for the HCAF's dedicated programs. The tax was originally
devised as a pass-through tax - the cost of the tax was to be be passed
through to insurers, and their policyholders - but the legislature failed to
create a mechanism to assure insurer payment of the bill. The tax is called a
provider tax because health care providers (practitioners and facilities) are
required to pay it whether or not they collect it from insurance companies and
patients.
"Taxing patients is a bad idea. If the initiatives funded by the provider tax
are supported by the general public, funds to pay for these programs should
come out of the general fund, not out of the pockets of patients," Brase says.
PUBLIC AWARENESS POSTER FOR PRACTITIONERS/CLINICS:
http://www.cchconline.org/pdfs/provider_tax_poster.pdf
CCHC PROVIDER TAX REPORT (Executive Summary):
http://www.cchconline.org/publications/providertaxsumm.php3
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CCHC is an independent non-profit free-market health care policy organization located in St. Paul, Minnesota
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