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Lawmakers should repeal the provider tax’s sunset provision

Allowing the 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.

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.

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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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