Real people, real communities: Why maintaining the provider tax is so important

Betsy Hammer
May 06, 2019

It’s hard to avoid news about the health care provider tax if you follow politics in Minnesota. Our state’s provider tax raises about $680 million each year for affordable health care and healthy communities from International Falls to Itasca to Inver Grove Heights. But policymakers must take action this session because this important revenue is slated to expire at the end of this year.

The legislative session is scheduled to end on May 20. That’s just a few short weeks away. Failure to act would have disastrous consequences for our Minnesota neighbors and communities around the state. Here’s what’s at stake:

Affordable health care for more than one million Minnesotans

Over one million Minnesotans – or, nearly 20 percent of us – have affordable health care funded in part by the provider tax. These include Minnesotans who access care through Medicaid and MinnesotaCare, and include seniors, people living with disabilities, and families earning lower wages. Kids make up 45 percent of all Medical Assistance enrollees.

Revenue from the provider tax goes into the Health Care Access Fund (HCAF). In FY 2019, the HCAF provided $439 million for Medical Assistance.

Healthy communities in every county

Minnesotans in rural communities can face more hurdles in getting affordable health care. The provider tax funds essential services to connect rural Minnesotans to health care and contributes to the health of their communities.

Rural Minnesota counties tend to have a greater portion of their residents who get health care through Medicaid or MinnesotaCare compared to urban areas. And, 46 percent of all Minnesotans who get their health coverage through Medicaid live in Greater Minnesota.

The importance of the provider tax to rural communities has been highlighted by the Minnesota Hospitals Association, which has stated it “supports the elimination of the sunset, given that the provider tax is a dedicated, sustainable funding source for insurance coverage for low-income, working families.” The Minnesota Hospital Association’s Vice President of Government Relations Mary Krinkie said that “over the past two decades, hospitals have come to appreciate the many good things that have been accomplished because of having the provider tax in place.”

The provider tax helps fund other efforts to address the health challenges of Greater Minnesota, whether that is the higher prevalence of child poverty or the lower ratio of primary care physicians to people. For example, the provider tax supports University of Minnesota initiatives focused on primary care, and the Statewide Health Improvement Partnership (SHIP) supports for community solutions for healthy lifestyles to reduce future health care costs.

Policymakers must act to extend the provider tax

As the end of session and the provider tax cliff loom large, policymakers must take action to extend the provider tax. The provider tax funds essential health care coverage for one in five Minnesotans and makes important investments in healthy communities across the state. Lack of reliable funding to support these activities would threaten the health of our Minnesota colleagues, neighbors, and friends.

-Betsy Hammer