Keep Minnesotans Healthy: Keep Our State Provider Tax

Keeping Minnesota’s health care provider tax in place is the key to a healthy Minnesota. The Minnesota Budget Project supports preserving this critical source of funding by repealing the scheduled sunset of the provider tax during the 2019 Legislative Session.

What's at stake?

Good health shouldn’t depend on someone’s paycheck or address. Thankfully, our state recognizes this and Minnesota has a long history of investing in health and the things that support our well-being. The health care provider tax is a 2 percent tax on health care providers, hospitals, and wholesale drug distributors. This essential investment in healthy communities is a critical funding source for affordable health care options; improved access to doctors, physical therapists, and mental health providers; and better health in communities in every corner of our state. 

The revenue from the health care provider tax supports affordable health care options like MinnesotaCare and Medicaid (which also goes by the name Medical Assistance), as well as other public health priorities. Over one million Minnesotans get affordable health care through MinnesotaCare and Medical Assistance, including working Minnesotans who don’t have affordable insurance through their jobs, seniors, and people living with disabilities.

However, the health of our neighbors and the health of the state’s budget are on the line this year as the provider tax is scheduled to sunset at the end of 2019. If that occurs, affordable health care and other important public health activities would be left without a dedicated funding source. Policymakers must extend the provider tax in order to preserve our health care system and keep us moving forward.

Health care provider tax revenues are the primary source of funding for the Health Care Access Fund, which then goes toward investments in Minnesotans’ health and well-being. If policymakers fail to extend the provider tax, it will be a serious blow to our ability to put affordable health care in reach for all communities. Minnesota is currently facing major challenges with racial equity and rural access to care, and losing the provider tax revenue will make our state’s response to these obstacles more difficult. 

The provider tax is critical for Minnesotans’ health, but if it is eliminated the consequences are much broader. If the provider tax expires at the end of 2019, it would result in an annual loss of about $700 million in dedicated funding for health care in Minnesota. A budget hole of this magnitude creates stress on other important priorities such as K-12 education, financial aid for college students, and new roads, bridges, and transit. Because the state must balance its budget every two years, losing the $700 million in health care provider tax revenue will constrain investment in the things that build a strong future for Minnesota and all our communities.

Current status

Governor Tim Walz’s proposed budget repeals the sunset of the provider tax. The Legislature is considering an extension of the provider tax:

Other alternatives to support access to health care are also under consideration; however, the provider tax is the only time-tested reliable option.

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