Hospitals Voice Concerns About Impact on Healthcare Access and Affordability
WALLINGFORD – The Connecticut Hospital Association (CHA) today expressed serious concern over Governor Lamont’s FY 2027 budget adjustment proposal related to the provider tax paid by Connecticut hospitals, warning that it threatens healthcare access and affordability. CHA also reacted to the governor’s budget proposals related to disbanding the Office of Health Strategy (OHS) and funding to study a government-run public option health plan.
GOVERNOR LAMONT’S TAX ON HOSPITALS
“The care Connecticut depends on is at risk under this proposed budget,” said Jennifer Jackson, CEO, CHA. “This tax proposal continues to ask hospitals to shoulder higher taxes while making little real investment in patient care at a time when financial burdens are already enormous. The result will be fewer resources at the bedside, higher healthcare costs imposed on consumers, and a more strained workforce.
“Connecticut hospitals already pay nearly a billion dollars each year in taxes while facing nearly $1.5 billion in annual losses due to Medicaid underpayment. Adding to the tax burden without meaningfully addressing this shortfall forces hospitals to make difficult choices. It threatens access to care and weakens the state’s healthcare safety net. When Medicaid underpayment isn’t addressed, costs shift to employers and families through higher premiums and out-of-pocket expenses. We urge state leaders to protect access, affordability, and patient care – not balance the state budget on the backs of patients,” Jackson said.
Governor Lamont’s hospital tax proposal would add an additional $100 million in new state taxes on hospitals in its first year, raising the amount hospitals will pay in taxes to $920 million in FY 2027. And once again, the majority of the tax increase would be directed to the state’s general fund rather than used to leverage federal dollars and returned to hospitals to support patient care.
THE IMPACT ON CONNECTICUT HOSPITALS
Patrick Charmel, President and Chief Executive Officer, Griffin Health, said: “The reality on the ground for independent community hospitals like ours is stark: Medicaid today pays only about sixty‑three cents for every dollar it costs us to care for our Medicaid patients, and yet we are being asked to absorb a higher tax on top of that chronic underpayment. This is not a theoretical budget issue – at my hospital it means real cuts to programs, longer waits for appointments, and fewer healthcare resources for some of the most vulnerable people in our community. When the state continues to underpay Medicaid and then raises the tax on hospitals, it does not make the cost of healthcare disappear – it simply shifts the bill to employers and families through higher premiums, higher deductibles, and higher out‑of‑pocket costs. It also constrains our ability to invest in innovation, new models of care, and the safety‑net services that low‑income patients rely upon. If this tax increase moves forward without meaningfully fixing Medicaid underpayment, Connecticut will have made a choice: to balance the state budget on the backs of patients, workers, and local communities, and to accept a future with fewer access points, less affordability, and a weaker healthcare safety net. I urge our leaders to choose a different path.”
Jeffrey Flaks, President and CEO, Hartford HealthCare, said: “Connecticut is home to the highest quality healthcare in the nation, and that is something we should all be proud of. Maintaining that standard of excellence requires investment as well as honest recognition of the challenges facing healthcare. Investing in healthcare should be a priority as it protects the workforce, ensures a focus on innovation and is an overall benefit to the state, ensuring this is the place where people want to live, work, and retire.”
Christopher O’Connor, Chief Executive Officer, Yale New Haven Health, said: “The state’s chronic under reimbursement of Medicaid services means we are paid the least when we care for the patients that need us the most. As our state’s largest provider of Medicaid and operator of essential safety net hospitals, our Health System’s costs exceeded our reimbursement by a combined total of $450 million caring for 663,509 Medicaid beneficiaries in 2024 alone. Governor Lamont’s proposed tax on hospitals would further exacerbate these losses, disproportionately impacting healthcare organizations that serve lower-income populations.”
Montez Carter, President and CEO, Trinity Health Of New England, said: “Medicaid underpayments have a ripple effect that impact everyone in need of care. Our entire health system and every community we serve feels the effects – reduced services, longer wait times, staff reductions, and the potential closure of programs and services. An underfunded Medicaid program that does not support safety net hospitals is impacting our ability to make needed investments in people, to maintain infrastructure, to recruit physicians and ultimately, in our ability to maintain access to care for the communities we serve.”
Kathleen Silard, President & CEO, Stamford Health, said: “While we appreciate that the governor’s proposed budget undoes the $375M tax increase imposed in last year’s biennium for 2027, we cannot support the proposal on the table. The Office of Health Strategy’s 2023 report demonstrated that Connecticut hospitals lose approximately $1.4 Billion providing care to Medicaid recipients annually – a figure that has surely escalated since. To make ends meet and enable a modest operating margin, Stamford Health and other hospitals must shift costs to commercial insurance contracts and therefore employers and working families. We stand ready to work with the Governor on a multi-year plan that right-sizes the tax for new Federal rules and provides a long-term commitment to fair Medicaid rates.”
Vincent Capece, President and CEO, Middlesex Health, said: “Medicaid underfunding has been a significant and ongoing issue in the State of Connecticut for many years. The negative impact of this underfunding is a major root cause of the affordability and access issues that have plagued Connecticut’s healthcare system. As long as this issue remains unaddressed, the strain on the entire system will grow increasingly severe. The status quo is not a sustainable option if we are to ensure the residents of Connecticut safe, affordable, high-quality healthcare in the future. As one of the only remaining independent hospitals in the state, it’s critical that we get reimbursed appropriately for the care that we provide.”
DISBANDING THE OFFICE OF HEALTH STRATEGY
CHA thanks the governor for recognizing the need to improve upon processes tied to the state’s critical healthcare responsibilities, including the certificate of need (CON) process and healthcare cost growth benchmarking. CHA appreciates that reorganizing agency responsibilities creates an opportunity for open dialogue and meaningful, constructive reform.
FUNDING TO STUDY A GOVERNMENT-RUN PUBLIC OPTION HEALTH PLAN
A government-run health plan will reduce access to care, reduce patient choice, and threaten the availability of high-quality care in communities across the state. It will add additional financial pressure to healthcare providers facing the challenges of Medicaid and Medicare underpayment and will result in even greater cost shifts. It is critically important that families already struggling with affordability and access are not forced to shoulder more.
A BETTER PATH FORWARD
Connecticut hospitals urge lawmakers to adopt a patient-first approach to the hospital tax and protect healthcare affordability and access by:
- Working together to fix the hospital tax so it puts patients first, ensuring 100% of any increase in the hospital tax is used to improve hospital reimbursement for patient care
- Addressing government underpayment by investing in Medicaid rates to ensure hospitals can sustain critical services
- Supporting the education, training, recruitment, and retention of essential healthcare workers, including primary care physicians
- Preserving patient choice by supporting actions to stabilize the small-group insurance market and preserve commercial insurance
- Addressing cost drivers by creating a state-funded uncompensated care pool to support the expected rise in uncompensated care due to federal Medicaid and ACA tax credit changes
- Reducing regulatory burdens to strengthen, not destabilize, the healthcare delivery system
