Preserving the provider tax is vital for affordable health care in Minnesota

Ben Horowitz
Apr 12, 2016

A lot has changed in the 24 years since the Health Care Access Fund (HCAF) was created to expand access to health care. The need for it has not. More than a million Minnesotans — many of them working hard but paid low wages — lack access to affordable, quality health insurance through their employers or the private market.

For many of these Minnesotans and their families, MinnesotaCare and Medical Assistance are essential sources of affordable health care coverage. The HCAF covers the state cost of MinnesotaCare completely, and also funds portions of Medical Assistance.

Unfortunately, this health coverage faces a serious threat because of legislation passed in 2011 that eliminates a crucial source of funding. Minnesota’s 2 percent provider tax, which supplies about four out of every five dollars that fuel the HCAF, is scheduled to sunset in 2020. In other words, if policymakers don’t act, the state will cease collecting the provider tax on January 1, 2020, putting health care for more than 100,000 low-income Minnesotans at risk and creating a big shortfall in the state budget.

The sunset is approaching at a time when Minnesota’s health care progress is looking particularly strong. The rate of insurance coverage in Minnesota is at an all-time high and racial disparities in coverage are decreasing.

If policymakers allow the sunset to proceed, Minnesota will be in a much worse position. The projected balances in the Health Care Access Fund would almost certainly disappear within a couple years, and the state would need to find alternative revenue sources or face more than $550 million in cuts to health care or other vital state services like education or public safety.

On the other hand, if the sunset is repealed, we will protect our current progress and Minnesota can move further toward all Minnesotans having access to coverage.

Some policymakers are trying to move Minnesota in the right direction. For example, Senator Kathy Sheran is scheduled to bring Senate File 2552 before the Senate Health and Human Services Budget Division on Wednesday. Among other things, the bill would preserve the provider tax, and, by proxy, affordable health care for Minnesotans.

The provider tax was a policy solution to advance an idea nearly everyone can agree is a good one: health insurance should be affordable for everybody. We’ve made progress, and we’re still heading in the right direction. We should not put the hard work and health care gains of the past 24 years at risk. Reversing the provider tax sunset would protect our health care future.