Now Is the Time To Fix the Hospital Tax: Connecticut Hospitals Elevate Urgency To Adopt New Model in State Budget

As the Connecticut General Assembly works to finalize a state budget adjustment before the legislative session ends in four weeks, hospitals are amplifying advocacy efforts to ensure the state fixes fundamental flaws in the current hospital tax model — a fix needed to protect lifesaving care in our communities.

For months, the Connecticut Hospital Association (CHA) has engaged legislative leaders and members of the Lamont administration in discussions about the future of the hospital provider tax and related provisions contained in the state budget.  CHA has outlined a comprehensive solution that reinvests all net proceeds from a hospital tax increase into patient care and begins to chip away at the $1.5 billion annual Medicaid shortfall contributing to chronic financial strain.  CHA’s hospital tax model creates stability and more predictability as hospitals grapple with growing costs and brace for federal policy changes that threaten to exacerbate operating challenges.

“We would like to lock in some certainty, for as much time as possible,” Paul Kidwell, senior vice president for policy, CHA, told the Connecticut Mirror in an article published this week.  “We think that just makes prudent sense for all of us.”

On March 31, the Finance, Revenue and Bonding Committee adopted SB 84, An Act Concerning Revenue Items To Implement The Governor’s Budget, which includes hospital tax revisions that align with CHA’s proposed approach and recommended new model.  In the Appropriations Committee, legislators voiced support for advancing a new hospital tax model like the Finance, Revenue and Bonding Committee, although the committee bill did not include CHA’s language on the tax.

“Within the legislature there’s a great desire” to assist hospitals more, remarked State Representative Maria Horn (D-Salisbury), co-chair of the Finance, Revenue and Bonding Committee.  “We ought to take seriously the opportunity to maximize the sustainability and health of our hospitals.”

“We are saying we want to see the federal revenues maximized,” said State Senator John Fonfara (D-Hartford), co-chair of the Finance, Revenue and Bonding Committee.  “We support not only hospitals, but I’m hoping that we also begin to recognize that reducing Medicaid costs… Getting people healthy and keeping them healthier longer will ultimately be part of this resolution.”

“We support going for maximization of any revenue that might be available,” said State Representative Toni Walker (D-New Haven), co-chair of the Appropriations Committee.  “We support the idea of proceeding in programs and everything that expand healthcare in the state of Connecticut… So when we look at potential for what we can fulfill with the new hospital tax model, what has been presented in the Finance Committee, we know that that is the direction that we are probably going to go into.”

“We know the bottom lines are tough.  Hospitals don’t get fully reimbursed, and patients feel the impact,” State Representative Nicole Klarides-Ditria (R-Seymour), member of the Finance, Revenue and Bonding Committee, commented about SB 84 during the March 31 public hearing.  Rep. Klarides-Ditria urged legislative leaders to “continue to work with CHA” and “use their language” in the revised budget agreement.

Negotiations continue between lawmakers and Governor Lamont on the budget. Both chambers of the General Assembly will vote on the final spending and revenue proposal before the legislature adjourns on May 6.  CHA urges elected officials to include a new hospital tax model comprising five key components:

1. Increase the value of the state’s tax on hospitals to leverage the maximum amount of federal revenue available
2. Use all net proceeds of the increased tax to support patient care delivered by hospitals
3. Ensure that all non-governmental hospitals participate in the tax program (including Connecticut Children’s and Waterbury Hospital) and reserve the benefit of the tax to only those hospitals that pay the tax
4. Seek to secure a five-year deal with the federal government
5. Preserve the state’s current $500 million share of the tax benefit in the coming fiscal year, while not expanding that share

Learn more at ProtectCTCare.org.

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