Health care provider tax is trimmed, but remains in place indefinitely

Health care provider tax is trimmed, but remains in place indefinitely

One of the most contentious issues before the 2019 Minnesota Legislature was the health care provider tax. The tax, which was to sunset at year’s end, was trimmed but saved after being a focus of debate all session.

What was a 2 percent tax will now be 1.8 percent. It will continue indefinitely, but it’s not clear what the long-term impacts of the reduction will be. Still, Gov. Tim Walz, the DFL-dominated House and the Republican-led Senate hailed that as a compromise.

The provider tax was originally set up in the 1990s to cover costs of MinnesotaCare. It since has been used to cover other health care needs for some of the state’s poorest residents. Walz and Democrats said that important source of funding should continue. Republicans seized the chance to try to eliminate a tax.

The final decision on the provider tax was one of many compromises this session. Another big focused was the health and human services (HHS) bill itself.

The House had proposed a 1,000-page bill. The Senate offering was much slimmer.

In recent years the health care provider tax has provided about $700 million annually for the Health Care Access Fund. That fund keeps many programs affordable.

One interesting note is that after squabbling over the provider tax all session, the budget negotiators agreed to take money out of the Health Care Access Fund and use it for other general fund needs. That agreement means that $784 million will be moved out of the fun over the next four years.

Minnesota Department of Human Services Commissioner Tony Lourey observed that slightly downsizing the provider tax and being able to use those funds to provide health care for needy Minnesotans was at the heart of the HHS compromise.

“I don’t know if there was another bill where the House and Senate were further apart than on this bill,” he said.

A history of the tax appears in this month’s History Note. A commentary on the tax is our Community section, Thanks to work of many, health care provider tax is saved.Image

The 650-page HHS bill didn’t come forward until late in the day May 24.