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Lawmakers should repeal the provider tax’s sunset provision

The health care provider tax funds essential health care services for more than 1 million Minnesotans.
The debate on the provider tax set to expire at the end of this year is slated to be one of the most contentious at the state Legislature this year. However, it does not have to be contentious at all. In fact, a simple repeal of the sunset of the tax would be a straightforward, time-tested solution that would ensure health care access and affordability for all Minnesotans and protect the stability of our entire state budget that relies on this critical source of revenue.

Bharti Wahi

Bharti Wahi

The health care provider tax funds essential health care services for more than 1 million Minnesotans and enables critical investments in the health and well-being of all Minnesota’s communities. Allowing the health care provider tax to expire would create an annual revenue shortfall of $680 million. This loss of funding would jeopardize health care access for thousands of low-income Minnesotans, including children, seniors and people with disabilities, and threaten the stability of the health care sector and negatively impact the state budget.

The provider tax was passed as a funding mechanism for the creation of MinnesotaCare – a program that when enacted was a ground-breaking innovation in health care access. It enabled Minnesota to be a national leader in health coverage and care over the past two decades.

However, our state’s innovation and progress has been waning. According to a Georgetown University report, for the first time in more than a decade the rate of uninsured children in the country rose. After gains in access to health coverage for Minnesota children, over the past year — even despite the robust economy — the rate in Minnesota remained stagnant.

Increasingly alarming are disparities in health care access and outcomes in Minnesota highlighted in the KIDS COUNT Data Center: Hispanic/Latino children and American Indian children are three and 6 times (respectively) as likely to be uninsured as white children; over the past decade late or inadequate access to prenatal care has grown by more than 7 percentage points; and the infant mortality rates for babies of color and American Indian babies born in Minnesota is higher than the national average. Moreover, as our state’s population ages, there are increasing demands on our health care system. Evidently we are at a crossroads in which we can’t afford to reduce or experiment with health care fund sources.

Dr. Mike Severson

Dr. Mike Severson

While a robust debate and exploration of ideas around a complex problem is healthy and truly Minnesotan, the Minnesota Medical Association proposed alternative to the provider tax, a “claims expenditure tax” that was highlighted in a Star Tribune editorial, has too many shortfalls to take a chance on in a time of such urgent and pressing health care needs. If passed the tax would almost positively face a court challenge as it did in Michigan, the only other state where it has ever been enacted. Due to its complexity and creation of competitive disadvantage, Michigan repealed the law last year.

In the seven years since the provider tax sunset was enacted in 2011, there has been more than sufficient time for possible alternatives to the health care provider tax to be proposed, vetted, and considered. However, no reliable alternative has emerged. Consequently, critical health care services for low-income Minnesotans and innovative community health programs are imminently at risk. Most important, the health and well-being of our future workforce, our children, is at risk. One in three Minnesota children rely on Medical Assistance to access health coverage and care, and not adequately funding the program and other beneficial public health care initiatives could mean cuts to necessary services for children and other vulnerable populations.

Dozens of consumer advocates, including health care providers who pay the tax, have signed a letter urging the Legislature and Walz administration to simply repeal the sunset of the provider tax to remove the cloud of uncertainty over the Health Care Access Fund and save the debate and new ideas for ways to solve the pressing health care challenges that are holding Minnesotans back from reaching their individual, as well as our collective, potential.

Bharti Wahi is the executive director of Children’s Defense Fund-Minnesota (CDF-MN). Dr. Mike Severson is a pediatrician, CDF-MN Advisory Board chair, and former president of the Minnesota Chapter of the American Academy of Pediatrics.

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Comments (4)

  1. Submitted by Bob Barnes on 02/14/2019 - 09:27 am.

    Repealing it means the tax will never go away. Let it sunset. Stop taxing me to pay for others. Fix the real issue instead of always taxing the people. Where is Ellison with some anti trust lawsuits against pharma, hospitals, doctors, insurance companies et al????

    • Submitted by Joel Stegner on 02/14/2019 - 03:59 pm.

      I hope when you are Medicare age, are able to use Medicaid to pay for your nursing home care or are unable to work due to a disability, you will refuse the tax funded programs our state offers for those with limited means. And perhaps you will explain your objection to tax dollars to support the healthcare of children unfortunate to be born into poverty and unable to work to pay for their care. Maybe we should do away with child labor laws so that can work in factories or perhaps become agriculture workers. People want their tax burden lifted, but fail to understand what happens when this occurs.

  2. Submitted by Alan Straka on 02/14/2019 - 02:06 pm.

    It is just crazy to tax health care providers to fund health care. Health care is expensive and this tax just makes it more so. Sure it helps the poor access the health care they need but this tax just raises the price of health care for the rest of us. You are deceiving yourself if you don’t think the providers are passing the cost onto their patients so in effect you are taxing the sick. This is typical government sleight of hand to fool the public by shifting the burden from the general fund where it belongs. If we want to help the less fortunate we should do it in an honest and above board manner.

    • Submitted by Tom Anderson on 02/14/2019 - 06:36 pm.

      I agree with A. Straka, much like the Federal tax on device makers, the tax falls on the very people providing the cures and care. How on earth does that make any sense? Just because a legislature a long time ago found a way to fund a program doesn’t mean that it was a good way to provide funding.

      And, my gosh, “One in three Minnesota children rely on Medical Assistance to access health coverage and care”. That is insane. And it is a symptom. Perhaps we should try to fix the problem instead of placing band-aids on the symptoms.

      Take the money out of the general fund, the children are obviously deserving (although I can’t say as much for their parents) and let’s let the cost affect ALL of us so that maybe the source problem can be fixed.

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