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Health care decisions facing 2019 Minnesota legislature

Tax on health care providers to vanish.

Posted: Dec 31, 2018 7:20 AM

MINNEAPOLIS (AP) — There's been lot of talk at the Capitol about a $1.5 billion budget surplus , but lawmakers are already worrying about how to plug a $700 million hole. That's because a tax on health care providers that helps fund Medicaid and the state's separate MinnesotaCare program is slated to go away at the end of the year.

Finding a solution is one of the top priorities for the 2019 session, which opens Jan. 8. Gov.-elect Tim Walz and leaders of the new Democratic majority in the House want to renew it to maintain a stable funding source for those programs, but the state's largest doctors' group is touting an alternative that might be politically palatable to the tax-averse Senate GOP majority .

As for that one-time $1.5 billion surplus, most of the discussion so far has been about how to spend it on one-time projects, such as road and bridge improvements, and other needs.

Here's a look at some top health issues facing the Minnesota Legislature:

THE PROVIDER TAX

The Legislature enacted the tax in 1992 to support programs including MinnesotaCare, which covers the working poor, and Medical Assistance, the state's name for Medicaid. Those programs now serve over 1 million residents, noted Nan Madden, director of the Minnesota Budget Project, an initiative of the Minnesota Council of Nonprofits. The tax on 2 percent of gross revenues applies to thousands of health care providers big and small.

Lawmakers voted in 2011 to repeal the tax starting in 2020 under a compromise between Democratic Gov. Mark Dayton and a GOP majority to end a 20-day government shutdown. The question of how to cope with the loss of what's now nearly $700 million annually got kicked down the road.

Walz and Democratic leaders want to renew the tax. Madden said renewal would preserve a stable source of funding when federal funding is less reliable.

But Republicans have long derided it as a "sick tax" that they say results in higher costs for everyone. The GOP holds just a one-seat majority in the Senate.

Sen. Jim Abeler thinks he has a solution. He plans to introduce a proposal from the Minnesota Medical Association to replace the provider tax with a 2 percent "fee" on claims processed by insurance companies and administrators of self-insurance plans. The Anoka Republican acknowledged that calling it a fee instead of a tax has echoes of 2005, when Gov. Tim Pawlenty called a tobacco tax increase a "health impact fee" because he had pledged not to raise taxes.

Abeler, a chiropractor, said one of the big criticisms of the provider tax is that it's a 2-percent direct hit on patients of smaller providers like him — as well as of dentists, psychologists, counselors and opticians. They often pay out-of-pocket if their insurance doesn't cover those services. Big care systems just pass the tax through to insurers.

MMA lobbyist Dave Renner said the fee, which the association calls a "claims expenditure adjustment," would be easier for the state to administer because far fewer entities than the current 8,000 providers would have to pay it. He acknowledged that keeping it at 2 percent would raise about $100 million less annually than the current tax, but said it would be enough. And he agreed that an "assessment" could be an easier sell than a tax.

MINNESOTACARE BUY-IN

Walz and other Democrats want to let all Minnesotans buy into MinnesotaCare, an idea that Dayton promoted as an alternative to the individual private insurance market.

But Republican leaders say it would hurt providers, especially struggling rural hospitals and clinics, because MinnesotaCare pays them less than insurers do.

How much the "public option" would cost the state is in dispute. The Dayton administration had said nearly all the costs would be covered by premiums from new enrollees.

REINSURANCE

Minnesota's reinsurance program to help insurers hold down premiums in the individual market is also up for renewal, and it might not be as heavy a lift.

That's because premiums are projected to fall as much as 28 percent in 2019, and there's likely to be leftover money from the $549 million that the 2017 Legislature appropriated (partly from provider tax money), and Republicans are strong supporters.

The reinsurance pool helps insurers offset claims from patients with unusually high expenses. The state Commerce Department has said that lawmakers will have to either put up more money or come up with an alternative for keeping rates stable.

Minnesota Coronavirus Cases

Data is updated nightly.

Cases: 485230

Reported Deaths: 6554
CountyCasesDeaths
Hennepin1006801585
Ramsey43047801
Dakota36254390
Anoka33274384
Washington22065255
Stearns18723201
St. Louis14794262
Scott13273107
Wright12517115
Olmsted1177988
Sherburne871572
Carver771040
Clay690387
Rice670091
Blue Earth593835
Kandiyohi579474
Crow Wing519681
Chisago498445
Otter Tail481870
Benton446190
Winona418049
Mower404131
Douglas392568
Nobles386847
Goodhue385568
Polk342762
McLeod339349
Beltrami337351
Morrison324247
Lyon313044
Itasca312746
Becker310941
Isanti305754
Carlton300149
Steele299711
Pine282016
Freeborn280523
Nicollet258141
Todd247830
Brown244637
Le Sueur235020
Mille Lacs227247
Cass219924
Waseca208917
Meeker207434
Martin189328
Wabasha18623
Roseau180217
Hubbard160640
Houston157314
Dodge15214
Renville149540
Redwood147027
Fillmore13728
Chippewa136335
Cottonwood134820
Pennington134116
Wadena130920
Faribault122917
Aitkin118933
Sibley117310
Watonwan11728
Rock115714
Kanabec107419
Pipestone101424
Yellow Medicine97617
Murray9438
Jackson93510
Swift87918
Pope8025
Marshall77815
Stevens7418
Lake73718
Clearwater71914
Lac qui Parle68316
Wilkin67110
Koochiching61811
Big Stone5163
Lincoln5062
Grant4918
Unassigned47968
Norman4768
Mahnomen4417
Kittson40821
Red Lake3625
Traverse3055
Lake of the Woods2191
Cook1180

Iowa Coronavirus Cases

Data is updated nightly.

Cases: 362189

Reported Deaths: 5414
CountyCasesDeaths
Polk58146549
Linn20653312
Scott18288207
Black Hawk16249291
Woodbury14961211
Johnson1383473
Dubuque13537194
Dallas1135890
Pottawattamie10765143
Story1021645
Warren555274
Clinton543284
Cerro Gordo533681
Webster518787
Marshall496272
Sioux494369
Buena Vista473236
Des Moines457661
Muscatine451191
Wapello4330108
Jasper416966
Plymouth394577
Lee375352
Marion359069
Jones294154
Henry292737
Carroll285548
Bremer280154
Crawford274735
Boone259630
Washington254147
Benton252854
Mahaska224346
Jackson221438
Dickinson217439
Tama213465
Kossuth208154
Clay193525
Hamilton192042
Delaware188839
Winneshiek188427
Buchanan185129
Fayette185035
Page183219
Hardin181039
Wright179731
Harrison179669
Cedar177923
Clayton168053
Butler166331
Mills163120
Floyd162740
Madison154518
Cherokee153935
Poweshiek153730
Hancock146829
Lyon145841
Allamakee145646
Iowa144423
Appanoose139147
Grundy139030
Jefferson138232
Winnebago138230
Cass134151
Calhoun133711
Mitchell130840
Louisa128241
Union126331
Chickasaw125213
Sac124218
Emmet121240
Shelby121033
Franklin118419
Humboldt117425
Guthrie116528
Palo Alto104921
Montgomery103936
Howard103121
Clarke100520
Unassigned9890
Keokuk98129
Monroe93128
Adair91928
Ida91032
Pocahontas85519
Davis82623
Monona81627
Greene77310
Lucas73821
Osceola70514
Worth6987
Taylor66412
Fremont5919
Decatur5789
Van Buren55918
Ringgold52020
Wayne48821
Audubon4869
Adams3264
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