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Keep Minnesotans healthy, keep our health care provider tax

 

Keeping Minnesota’s health care provider tax in place is 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 happened in the 2019 Legislative Session?

The health care provider tax was permanently extended as part of the budget agreement reached by Governor Tim Walz and the Minnesota Legislature. However, the provider tax rate was reduced from 2 percent to 1.8 percent. While current investments in affordable health care and healthy communities were preserved, this means fewer resources will be available in the long term to make progress on ensuring affordable health care is available to every Minnesotan.

Maintaining the provider tax had been included in Governor Walz's proposed budget and the House health and human services budget, and was considered in the Legislature as House File 2459 (Representative Diane Loeffler) and Senate File 2462 (Senator Jeff Hayden).

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 was on the line this year as the provider tax had been scheduled to sunset at the end of 2019. If that had occurred, affordable health care and other important public health activities would be left without a dedicated funding source.

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. Failing to extend the provider tax would have been 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 would have made our state’s response to these obstacles more difficult.

The consequences would have been even broader. If the provider tax had expired at the end of 2019, it would have resulted in an annual loss of about $700 million in dedicated funding for health care in Minnesota. A budget hole of this magnitude would have created 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 provider tax revenue would have constrained investment in the things that build a strong future for Minnesota and all our communities.

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