Landmark Healthcare Legislation: New Patient-Focused Hospital Tax Model Included in State Budget Adjustment

On Wednesday, May 6, the 2026 Connecticut Legislative Session came to a close, marking the end of a session that included the General Assembly’s approval of a fiscal year (FY) 2027 biennial state budget adjustment that includes the hospital tax model developed by the Connecticut Hospital Association (CHA), marking a pivotal moment in supporting the sustainability of healthcare delivery in Connecticut.

Throughout the session, hospitals formed a united front to advocate for the adoption of the new hospital tax model, which maximizes federal funding and reinvests revenue back into patient care.  CHA executed a highly visible, impactful advocacy campaign to heighten urgency around building the new model into the state budget adjustment, and hospital teams engaged lawmakers and state officials in persistent conversations to convey the gravity of establishing a forward-thinking solution before the state’s 2019 hospital tax settlement expired in June.  State leaders and legislators heard hospitals and collaborated with CHA to advance a landmark, long-term plan.  At its core, the model ensures hospital taxes function as an effective financing tool to support Medicaid and safeguard the nationally recognized care and exceptional healthcare workforce that define Connecticut.

“We are deeply grateful to bipartisan lawmakers and Governor Lamont for their leadership, partnership, and commitment to putting patients first.  This is a breakthrough for healthcare in Connecticut — a major milestone for healthcare access, affordability, and preserving the high-quality care for which Connecticut is recognized in every community,” said Jennifer Jackson, CEO, CHA.

The five-year model is carefully designed to align with federal requirements and policies, while positioning Connecticut for long-term stability and predictability.  The agreement also includes enhancements to Connecticut’s Healthcare Cost Growth Benchmark initiative, which establishes targets for sustainable healthcare spending growth.  The provisions refine how benchmarks are set and strengthen the quality of data used to measure and guide statewide progress.

Read CHA’s full statement on the hospital tax provisions in the state budget here.

Overview of State Budget Adjustments

The Connecticut General Assembly released its FY 2027 biennial budget adjustments on Saturday, May 2, and then passed additional revisions on Monday, May 4, before adjourning Sine Die at midnight on Wednesday.

The $55.8 billion budget adjustment includes $28.1 billion in spending in fiscal year 2027, beginning July 1, 2026.  The proposal increases spending 4.6% over the previously adopted budget.  The budget bill, SB 1, An Act Concerning Affordability, was immediately transmitted to the governor for further action.  Governor Lamont has publicly expressed support for the revised budget package and is expected to sign it.

Elevated by the dissolution of the Office of Health Strategy (OHS) and redistribution of key duties to other state agencies, the certificate of need (CON) process took center stage this session, and CHA led the charge to bring long-overdue reform to fruition.  With essential input from CHA, based on the guidance, advice, and engagement of hospital leaders and advocacy teams, the state adopted provisions to streamline CON applications, reduce redundancy, expedite authorizations, and apply the process equitably.  These changes reflect years of hospital advocacy and extensive policy negotiations to ensure the CON process advances clinical innovation, bolsters the state’s economy, and preserves patients’ access to care.

During the 2026 Legislative Session, CHA testified on nearly 100 bills and provided input and advocacy on dozens more.  The short session was fast-paced and packed with a flurry of healthcare-related activity, demanding the vigilance and agility of hospitals.  CHA extends deep appreciation for the skill and tenacity of government relations teams whose advocacy amplified hospitals’ collective voice to make lasting, powerful impacts on our healthcare delivery system.

Related News:

CHA Applauds Advancement of State Budget Including New Patient-Focused Hospital Tax Model

Our Healthcare Can’t Wait: CHA Intensifies Advocacy To Advance Hospital Tax Reform

Capitol Update: Hospitals Elevate Opposition to Governor’s Proposed Tax Increase, Testify on Office of Health Strategy Dissolution