Testimony on provider tax

CCHC Testimony
Minnesota House Tax Committee
Topic: Omnibus Tax Bill March 21, 2000
CCHC Focus: MinnesotaCare Provider Tax Provisions

Mr. Chair and Members of the Committee:

First, I'd like to express my appreciation for the tax relief you have added in this bill through new deductibility for health insurance premiums. 

Second, I've come here today simply to remind you of how the provider tax on health care services has collected revenues far in excess of the amount needed for care and coverage of MinnesotaCare recipients. However, unlike the auto theft fee that was discussed yesterday on the House floor, we're not talking about 50¢ a year. We're talking about a 2 percent tax, now a 1.5 percent tax, on being sick.
 
And like the auto theft fee, provider tax dollars have been diverted into other initiatives to the tune of $276 million of initiatives plus $200 million in surplus funds.
 
As you can see on the charts provided for you from our report which we delivered to you on February 15th, provider tax collections between 1992 and 1998 exceed care and coverage expenses by 248%. In other words, two and one-half times more money has been collected than is needed.
 
This is a tax on the sick. It seems inherantly wrong to use sickness and injury as an opportunity for taxation. In addition, the tax has kept doctors out of Minnesota and it threatens the solvency of Minnesota's hospitals. Put together, the tax has increased the cost of health care and decreased access to health care.
 
Thus far, this bill keeps the provider tax intact, however we note that you do extend the reduction of 1.5% for another year. We'd just like you to consider our reports findings as you finalize the bill. Thank you.