Minnesota is consistently ranked among the highest-taxed states in the country. Depending on the survey, we battle a handful of states on either coast for the dubious honor roll of least tax-friendly places to live.
While Gov. Mark Dayton and others boast that this honor is due to our progressive tax system that asks rich people to pay their fair share, the reality is that Minnesota hits poor and middle-income earners hard.
Minnesota’s sick tax is a 2 percent tax only Minnesotans pay when we go to the doctor or the dentist. Every surgery. Every test. Every filling … everything. This regressive tax, which Dayton and the Legislature agreed to eliminate as of next year, is being defended as crucial by DFL gubernatorial candidate Tim Walz, by the Star Tribune Editorial Board (“Next governor faces health care fiscal cliff,” Aug. 26) and now by Dayton himself as crucial.
I authored the bill to get rid of the sick tax. Not only is the tax regressive, it is now completely unnecessary, and the surpluses in its fund create an irresistible temptation for legislators to spend hundreds of millions more outside of the general fund on whatever they want, without it showing up on their tab.
The tax was originally created in the early 1990s to fund MinnesotaCare, a program aimed at health care for low-income families with kids. It worked pretty well. The program was limited to protect hospitals and taxpayers. But now, rural hospitals are closing their doors because so many of their patients are on expansive government programs that cover more stuff, but only pay half of what private insurance pays.
In his first act as governor, Mark Dayton exercised his authority to expand federal Medicaid to cover everyone who would have been covered by the original MinnesotaCare program, and more. A lot more. Proponents of that expansion touted the money Minnesota would save by letting the feds step in and take the burden, making the Minnesota-only sick tax unnecessary. People were moved from private insurance to public programs, while the vast majority of the uninsured were already eligible for care without a premium, deductible or copay.
Currently, a million Minnesotans are on Medicaid. That’s right, nearly 1 in 5 of us.
Dayton also expanded MinnesotaCare to cover even more people and distributed federal money to pay for that, too. MinnesotaCare is now paid for without the need for the 2 percent sick tax. That is just a fact.
So, if these programs are covered, and the sick tax isn’t going away until next year, what happened to all that state money?
Well, it started to pile up. We all know what happens to a growing pile of money near a legislature. It gets spent. Some $400 million of it went to bail out the insurance companies. Some $244 million was transferred to the general fund to backfill “health care spending,” essentially freeing up more money to spend on whatever legislators and governor want.
My legislation called for the sick tax to ratchet down to prevent a “cliff,” but each time the balance got high enough to warrant a reduction, money was spent to keep the 2 percent tax at full strength.
The Healthcare Access Fund is now backfilling the general fund and is being used essentially as an overdraft account so lawmakers can spend over (and outside) of their budget. This irresponsible habit is supported by folks on both sides of the aisle who want a health care credit card to spend on whatever they please, while continuing to max out the general fund. Don’t let the self-righteous scolds get away with telling you it is responsible, or preserving MinnesotaCare. That’s bull hockey.
If legislators want a new reinsurance program, or more money for pet projects, tell them to fund it in their $50 billion budget, or vote a tax increase to honestly pay for it.
Matt Dean, R-Dellwood, is a member of the Minnesota House.