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: 589527

Reported Deaths: 7333
CountyCasesDeaths
Hennepin1221311726
Ramsey51028871
Dakota45667448
Anoka41421437
Washington26724281
Stearns22139221
St. Louis17682302
Scott17201124
Wright15943139
Olmsted1319098
Sherburne1160286
Carver1044945
Clay812792
Rice8014106
Blue Earth746141
Crow Wing660988
Kandiyohi652083
Chisago592551
Otter Tail572978
Benton565997
Goodhue475772
Douglas464674
Mower464032
Winona452950
Itasca432254
McLeod421658
Isanti417364
Morrison417360
Nobles407248
Beltrami392458
Steele384915
Polk382468
Becker378850
Lyon359850
Carlton344153
Freeborn341129
Pine326722
Nicollet323843
Brown304640
Mille Lacs302452
Le Sueur289222
Todd280632
Cass269628
Meeker254340
Waseca236522
Martin229831
Roseau207919
Wabasha20483
Hubbard187141
Dodge18373
Renville178943
Redwood172936
Houston171515
Cottonwood164321
Fillmore155510
Wadena155122
Pennington153619
Chippewa151838
Faribault151319
Kanabec143424
Sibley142510
Aitkin134236
Watonwan13219
Rock128019
Jackson121711
Pipestone115126
Yellow Medicine113820
Pope10956
Murray10609
Swift104918
Stevens90211
Marshall88017
Clearwater86416
Koochiching81715
Lake80819
Wilkin80712
Lac qui Parle75022
Big Stone5984
Lincoln5773
Grant5678
Mahnomen5459
Norman5399
Unassigned48793
Kittson48522
Red Lake3957
Traverse3685
Lake of the Woods3223
Cook1610

Iowa Coronavirus Cases

Data is updated nightly.

Cases: 366197

Reported Deaths: 5929
CountyCasesDeaths
Polk57488623
Linn20814334
Scott19960240
Black Hawk15785308
Woodbury15121228
Johnson1445783
Dubuque13355209
Dallas1116198
Pottawattamie11091168
Story1059248
Warren575888
Clinton554393
Cerro Gordo538089
Sioux513874
Webster512193
Marshall482175
Muscatine477499
Des Moines454366
Wapello4297122
Buena Vista424540
Jasper418672
Plymouth400680
Lee375055
Marion361775
Jones298157
Henry291137
Carroll285452
Bremer283960
Crawford265840
Boone263934
Benton256055
Washington253950
Dickinson247843
Mahaska229951
Jackson221242
Clay215325
Kossuth215264
Delaware209240
Tama209271
Winneshiek196934
Page192622
Buchanan190731
Cedar189423
Hardin184943
Fayette184841
Wright184336
Hamilton179449
Harrison179373
Clayton169256
Butler164634
Mills161722
Madison161519
Floyd160342
Cherokee158738
Lyon157741
Poweshiek154733
Allamakee151151
Iowa148324
Hancock147634
Winnebago141731
Calhoun138113
Cass137954
Grundy136233
Emmet134040
Jefferson132435
Shelby130737
Sac130119
Union128133
Appanoose128049
Louisa127849
Mitchell126042
Chickasaw123915
Guthrie121030
Franklin119321
Humboldt118826
Palo Alto112523
Howard104522
Montgomery103338
Clarke99924
Unassigned9770
Keokuk95631
Monroe95129
Ida90334
Adair86432
Pocahontas85322
Davis82824
Monona82830
Osceola78516
Greene77610
Lucas77123
Worth7438
Taylor65712
Fremont6229
Decatur6089
Van Buren55618
Ringgold55524
Wayne53723
Audubon50810
Adams3384
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