Adjustments of MinnesotaCare tax

When federal health care reform legislation is scheduled to be implemented next year, Minnesota would likely see a migration from some residents using MinnesotaCare to Medicaid. That is the contention of supporters of HF1584, sponsored by House Majority Leader Matt Dean (R-Dellwood), which would direct the commissioners of the Revenue Department and Minnesota Management & Budget to adjust the MinnesotaCare tax on health care providers if such a decrease of residents using MinnesotaCare were to result in a 25 percent cushion in the anticipated fund expenditures.

The bill was approved by the House Taxes Committee on May 2 and referred to the House Ways and Means Committee. It has no Senate companion.

The bill would direct the Revenue Department and Minnesota Management & Budget to annually review the Health Care Access Fund and reduce the MinnesotaCare provider taxes and the 1 percent tax on the premium revenue of nonprofit health plan companies, if projected fund revenues, plus any projected balance, exceeds

125 percent of projected fund expenditures. The MinnesotaCare provider tax rate is 2 percent of gross revenues and applies to health care providers, hospitals, surgical centers and wholesale drug distributors. Revenues from the provider tax and the tax on nonprofit health plan premiums are deposited into the fund.

Dean said that although the fund is projected to be depleted over the next 12-15 months, implementation of federal health care reform would likely result in fewer MinnesotaCare users and an accumulation of funds that would necessitate readjustment of the MinnesotaCare tax.

The bill would not only help balance the Health Care Access Fund, “but more importantly, carry on the discussion of what is going to happen with our MinnesotaCare 2 percent tax, what is going to happen with MinnesotaCare and keep that discussion moving forward,” Dean said during an April 27 hearing in the House Health and Human Services Reform Committee.

Rep. Diane Loeffler (DFL-Mpls) reminded tax committee members that the bill would be potentially influenced by other proposed health care reform bills currently moving through the House.

“I want to caution people that based on some other policies being considered it is pretty shaky right now,” Loeffler said. “We need to watch this before we move forward.”

MinnesotaCare is a state health coverage program for low-income individuals and families who do not have access to employee-sponsored health insurance.