Repealing the provider tax puts vital health care services at risk

Christina Wessel
Apr 19, 2013

Later today, the Senate Tax Committee is expected to hear Senate File 1034, the Health and Human Services omnibus bill. We strongly support the provision in the bill that takes the fiscally responsible action of continuing needed revenues by repealing the scheduled sunset of the provider tax.

The provider tax funds affordable health care for Minnesota's low- and moderate-income working families. It raises $1.1 billion in the next biennium and nearly $1.3 billion in the FY 2016-17 biennium to meet the health care needs of Minnesotans. These resources are deposited into the Health Care Access Fund where they have traditionally been used to fund MinnesotaCare, helping more than 100,000 Minnesotans access health insurance.

The Governor, House and Senate have all chosen in their budget proposals to use the Health Care Access Fund dollars in the next biennium to pay for more than $400 million in Medical Assistance spending that is currently paid from the state’s general fund. In FY 2016-17, that amount grows to $600 million in the Senate omnibus bill and $741 million in the House omnibus bill. Medical Assistance is the state’s Medicaid program, providing very low-cost insurance to our lowest income families.

The decision to use Health Care Access Fund dollars to fund vital health care services for our lowest-income families creates the very reasonable expectation that these funds will continue to be there in the future.

But that is not the case. In current law, the provider tax sunsets December 31, 2019, the result of an agreement reached during final budget negotiations in 2011. There has not been a public discussion about the implications of eliminating the provider tax.

If the provider tax sunsets in 2019 with no alternative revenue source in place, we put health care for hundreds of thousands of vulnerable Minnesotans at risk.

Minnesota has long been a leader in health care reform, making sure that Minnesota families have access to meaningful and affordable health care coverage. We fully anticipate that Minnesota will continue to maintain its commitment to MinnesotaCare and Medical Assistance long after 2019.

By taking the responsible action of keeping the provider tax in place, Senator Lourey's health and human services omnibus bill acknowledges that we are using the Health Care Access Fund to ease budget pressures in the general fund, protecting more than $1 billion in resources Minnesota will need to provide health insurance in the future.

Repealing the provider tax without an alternative revenue source in place is irresponsible, jeopardizing vital health care services and creating a gigantic fiscal hole in the not-so-distant future. However, maintaining the provider tax creates an opportunity to have a discussion about how we should fund health care in the future.