Provider Tax

$1,600,000,000
and Rising

Minnesota Loses Another Health Insurance Option -- World Insurance Drops Out of State citing Regulatory Environment

Another sign that health insurance options for Minnesota consumers are increasingly limited to HMOs has just surfaced in a letter to insurance agents. World Insurance has just notified their Minnesota agents by mail that the company will no longer write insurance in Minnesota.

MinnesotaCare is a Welfare Program

Coverage for inhospital expenses are limited to $10,000 for adults with higher incomes. There is no catastrophic insurance coverage for these adults. Adults risk transfer into Medical Assistance.

MN Legislature May Unwittingly Help HMOs Cut Their Financial Obligations for Patient Care

According to Citizens' Council on Health Care (CCHC), Minnesota legislators want health plans to cut payments to providers if the MinnesotaCare provider tax is repealed. However, in a detailed report published by CCHC last year, CCHC found no evidence that health plan payments to providers between 1993 and 1999 ever included the provider tax.

Provider tax plan ill-advised, says CCHC

Because the HMO tax is passed on directly to small businesses, the business community has pressured the Ventura administration to eliminate this tax burden which has added to the rapidly rising cost of health insurance premiums. As a result of lobbying, the HMO tax was suspended in 1999 and no revenue was collected in 2000.

Testimony on provider tax

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.

MinnesotaCare provider tax report reveals tax burden on patients; diversion of funds

"Our research finds that people who support the tax, and those who pay the tax, want the money to be used solely for the MinnesotaCare program&emdash;to insure the uninsured and to reimburse those who care for them," Brase explained. "We believe the public will be surprised by how few dollars have gone into the MinnesotaCare program and how many have been diverted to the General Fund or stashed away for a 'rainy day.'"

"Distribution, Utilization, and Impact of the MinnesotaCare Provider Tax"

Taxing the Sick:  MinnesotaCare provider tax revenues have provided 78 percent, or $749.5 million, of the $960.4 million collected in the Health Care Access Fund since 1993. Health care providers have paid 51 percent of all provider taxes collected while payments from hospitals account for 33 percent. Of the $825.7 million collected in tax revenue, which includes a portion of cigarette taxes in 1992 and 1993, HMOs paid only $46.5 million through the gross premiums tax -- a total of 5.65 percent. 

The 2% MinnesotaCare Tax

Letter to Physician from the Commissioner of the Minnesota Department of Revenue

Before MinnesotaCare, health care providers bore the cost of caring for Minnesotans who could not afford medical insurance, either by absorbing costs themselves, or by charging their insured patients higher fees. This, in turn, affected the premiums paid by insured Minnesotans, as insurers passed on the higher fees to their policyholders.

Health Care Access Fund Initiatives

MinnesotaCare is a comprehensive strategy to improve the quality of health care services, increase access to health coverage for the uninsured and contain health care costs. These strategies are funded by premiums paid by enrollees of the program to the uninsured, a 1% premium tax on HMOs and non-profit health service companies and 2% tax on providers. The total amount of revenue generated by these funding mechanisms will be approximately $200 million in fiscal year 1997 Of the funds currently being used from this fund, approximately 80% is used for the MinnesotaCare Subsidy Program for the Uninsured while the remaining 20% is used for initiatives such as those below. The following list of activities, all supported by the fund, are varied and help to meet the goals identified above.