| For Immediate Release | For more information contact: |
| September 5, 2000 | Lindsay Sander (651-297- 5600) |
ST. PAUL House Republican lawmakers called for the elimination of the Minnesota health care provider and health insurance premium taxes during the upcoming legislative session. Rep. Mark Buesgens, R-Jordan, said the move was to continue the efforts of the last two years of tax cutting through the elimination of a tax that raises the cost of health care premiums and services.
"The people of Minnesota should be disgusted by the idea of taxing the sick," Rep. Buesgens said. "There is no doubt we live in the land of the taxes, but seeking out those who are already in time of need is not something we should resort to; unfortunately we did. We are now in a great position to do something about it, and the Legislature should waste no time in eliminating one of the more regressive taxes this state collects."
According to Buesgens, the proposal will closely resemble a bill introduced last session by House Republican leaders. The bill provided for a contingent elimination of the one percent premium and provider taxes on or after Jan. 1, 2001, replacing those funds with one-time and ongoing payments from the tobacco settlement. The preliminary cost estimate of the plan is $215 million in fiscal year 2003.
"Minnesotans spend over $17 billion for health care every year, and that number continues to rise," Buesgens said. "Eliminating the provider and premium taxes will be one way to help reign in those costs in order to make health care more affordable to individuals, families and especially employers."
The plan will also contain a provision to pass the savings along to purchasers. It will require health plan company premium rates to reflect all savings resulting from eliminating the MnCare provider tax, as well as the one percent premium tax on nonprofit health plan companies. Each company would be mandated to document compliance, and allow the commissioners of Health and Commerce to take enforcement actions, if needed. This "pass-through" provision is intended to guarantee that consumers realize lower prices as a result of eliminating these taxes.
The MinnesotaCare tax, commonly referred to as the provider tax, is a 1.5 percent tax collected from health care providers through out the state. The tax is currently scheduled to increase to 2 percent on Jan. 1, 2002. The revenues from the provider tax are used to fund MnCare, a state-subsidized health insurance program for low-income individuals.
"We are committed to keeping the MnCare program intact," Buesgens concluded. "Over the last two years, we have made substantial commitment to the Senior Prescription Drug Program and other important health programs. That commitment will continue."
The premium tax is imposed on the gross premiums of domestic and foreign health insurance companies. Revenues collected from the premium tax are deposited in the state Health Care Access Fund for purposes of funding the MinnesotaCare program.
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