The myth of the health care access fund

At the Capitol today, some health care advocates pushed for a higher “provider tax” to avoid health care cuts proposed by Gov. Tim Pawlenty.

The 2 percent tax — known as a “sick tax” in health care provider circles — is part of the funding mechanism for the Health Care Access Fund, which also uses premiums paid by enrollees of MinnesotaCare, the state-subsidized health care plan for low-income Minnesotans. The tax is levied on doctors, dentists, and other health care providers.

“MinnesotaCare is an excellent program providing coverage for the working poor in Minnesota and if it requires some additional tax on health care providers to keep those services in place, our members as a whole are willing to step forward and do that,” said Lawrence Massa with the Minnesota Hospitals Association.

If you didn’t know any better, you’d think the HCAF had run out of money, so the governor is imposing the cuts. You’d be wrong.

The Health Care Access Fund is one of the few dedicated taxes in Minnesota that actually works for the limited goal that spawned it. It works so well, in fact, that it often runs a surplus, which is why the governor and Legislature have regularly used it as a “slush fund” to balance shortfalls in the state budget, over the objection of the health care providers.

Last year, for example, the governor proposed pulling $149 million from the fund. Over his term, he’s diverted more than $400 million from the fund.

Writing in the Spokesman Recorder last month, Rep. Bobby Joe Champion criticized the governor for proposing the HCAF money go directly into the General Fund.

The governor wants to keep collecting the Provider Tax while diverting it away from the people it was created to help. That’s on top of the hundreds of millions of dollars that his administration has already shifted out of the fund to balance previous deficits. Those shifts have resulted in fewer people able to access MinnesotaCare and other programs.

Such a move would have allowed Pawlenty to spend the health care tax on anything but health care, and avoid the annual attention of raiding the fund. Tax bills emerging in the House and Senate, however, did not include Pawlenty’s plan.

The people Massa represents — hospitals — have a serious problem, to be sure. The Bemidji Pioneer’s Brad Swenson admirably describes the health care mess (registration required), partially created by years of shifting money from areas for which it was intended.

The situation is the underpinning of the coming showdown between the governor and Legislature. But its core is simple.

1. Health care providers pay a tax to provide health insurance for low-income Minnesotans.

2. The fund that provides the insurance often runs a surplus.

3. The governor diverts the surplus — and more — to other uses and notes the spiraling cost of health care, while cutting reimbursements to hospitals who end up providing care to those who can’t afford to pay for it.

4. Pressure builds to remove more people from health insurance coverage.

5. Proposals surface to increase the tax to provide health insurance for low-income Minnesotans, even though it ends up being used for something else.

The problem, of course, is exacerbated by the reality of the economy and the state budget which — even if the health care fund were used for other things — is still going to lead to major cuts in Minnesota health care.

Does anybody see a solution here?

  • adam

    Well, perhaps the Governor can keep his grubby little hands off the dedicated healthcare funds. If healthcare providers are being taxed to help support the working poor then funds should be used for that, no?

    What is the thought process here?

    …The state needs money…I said I wouldn’t raise taxes…But the state needs money……I know, lets raise taxes on healthcare providers so we have more money to divert to other areas…No one who matters to me will care or be affected by this…so what if there are less insured…so what if the quality of healthcare is degraded…I think I can have my cake and eat it too.

    I know its not a constructive comment but you should see the steam coming out of my ears right about now.

  • Minn whaler

    Call it a fee. that can help our current governor stick to his promise of no new taxes. This has been a successful use of nomenclature with those who choose to smoke. Not a cigarette tax, a health impact fee. I think this is the answer to many of the current issues if one is able to keep the fund from fees “bureaucracy redefinition free”. IOW…

    gas tax=road user fee. tobacco user=health care user fee. etc. I would have a much more effiecient weel maintained car if the gas tax actually repaired roads, but since there hasn’t been an increase in that fee since the 80’s (until last year [.02/gal] and still not dedicated to transportation and roads? Nearly lost my car to lake size potholes this year and last time I checked..

    we have enough lakes

  • Elizabeth T

    Somehow wave my magic Political Fairy wand and convince the people of Minnesota that Taxes Are Not Evil.

    We need to pay more taxes. For all of those things that the GOP seems to think will pay for themselves:

    health care

    primary (K-12) schools

    road maintenance

    Taxes = Sharing

    My 4 year old: Why do we have to share?

    Me: Sharing is so that everyone can be equally unhappy.

    Just accept that we will pay taxes.

    Gas tax. This is a real user-based tax. Drive less, pay less. If you pay less gas tax, the City will get more by you paying bus/rail fair – or – the State will pay less because biking to work makes you healthier. This is a good tax: it is totally up to you, the taxpayer whether or not you want to pay it (unlike sales tax, where you pay no matter what).

    Make the whole tax system a flat tax. With all the money we’ll save by not paying for the State Tax Office, we’ll be able to pave Cedar Ave.

  • BJ

    @Elizabeth you said “Make the whole tax system a flat tax.”

    Flat tax of what: sales, income, wealth, estimated value of things I own?

  • Dan

    Tell me why as a physician I should pay this tax at all? We don’t tax just teachers to pay for schools or afscme members to pay for government this tax is an outrage and probaly unconstitutional.