Minnesota’s public health programs — MinnesotaCare and Medical Assistance — need a dependable source of funding. All Minnesotans should agree on that. These are valuable safety net programs that serve more than 200,000 vulnerable Minnesotans each year.
Since 1992, these programs have been funded by a 2 percent tax on the gross revenue generated by providers of health care goods and services. Revenues from services provided by physicians, dentists, chiropractors, physical therapists, optometrists, psychologists and most other health care providers are subject to the tax, as is revenue for services provided at hospitals and ambulatory surgery centers.
In response to changes in federal health care financing under the Affordable Care Act, the GOP-controlled Legislature and Gov. Mark Dayton reached a bipartisan agreement in 2011 to sunset the provider tax at the end of 2019. However, without ongoing replacement funding, MinnesotaCare, Medical Assistance and other programs face an uncertain future.
DFL leadership wants to repeal the sunset. GOP leadership wants to maintain the sunset without identifying ongoing funds for the programs. We urge Gov. Tim Walz and the Legislature to consider a third option — one that would right-size and modernize the funding mechanism for our public health programs.
We have introduced a bill that creates a new Claims Expenditure Assessment (CEA) as an alternative. The CEA would be applied to paid claims processed by health plans and third-party administrators as an alternative to the provider tax.
Because this CEA would be tied directly to paid claims for health care expenditures, it will be a stable source of needed funds to preserve coverage for those who depend on MinnesotaCare and Medical Assistance. Courts have found this type of solution to be broad-based and apply to both regulated insurers and self-insured companies.
The CEA would be less regressive than the provider tax, because it would be applied only to health care for which there is a claim. Patients who are uninsured or who are paying out of pocket for health care would not be taxed as they are today.
The bill, which is based on research completed by the Minnesota Medical Association in 2018, will not increase the cost of health care. While it is intended to raise enough money to fund all programs that are currently funded, it is a tax reduction relative to the provider tax.
In addition, the CEA will be easier for the state to administer because fewer entities would collect and pay the assessment, as opposed to the thousands of entities who pay the provider tax. There is a very real cost to health care providers to remain compliant with the quarterly provider tax payments. The CEA removes the burden of assessing and collecting tax for all clinics, including small clinics that don’t have a large administrative staff.
In these times of intractable politics, we four senators, from both sides of the aisle, think it’s imperative that all options be considered to ensure ongoing funding for our safety net programs. Our option provides a stable source of funding that is fairer to patients and easier to administer. It deserves to be considered.
Jim Abeler (R-Anoka), Melisa Franzen (DFL-Edina), Scott Jensen (R-Chaska) and Matt Klein (DFL-Mendota Heights) are members of the Minnesota Senate.