Greenwich Delegation Pledges Support for Eliminating the Hospitals Tax

March 13, 2014

Hartford – The Connecticut General Assembly’s Greenwich Delegation announces their united support for a bill that would phase out the hospitals tax. State Senator L. Scott Frantz (R-36) along with Representatives Livvy Floren (R-149), Stephen Walko (R-150), and Fred Camillo (R-151) praised Raised Bill No. 368 An Act Phasing Out the Hospitals Tax at a public hearing today.

“This tax places unnecessary burdens on our hospitals,” said Senator Frantz, “By repealing the hospitals tax, we can alleviate these burdens and enable hospitals to reduce the costs of health care, improve access to services and retain jobs.”

Representative Floren, a member of the Finance, Revenue and Bonding Committee, agreed. “Quality healthcare is a top priority for all of us in Connecticut…and our hospitals are the cornerstone. It is in the best interest of all our citizens to help reduce the onerous financial burdens placed upon hospitals. In reducing their financial burden, they can better service all of those seeking their expert care,” she said.

The Greenwich Delegation asked the Finance, Revenue and Bonding Committee, on which Senator Frantz sits as the Ranking Member, to raise this bill at the start of the legislative session after hearing about the many burdens Greenwich Hospital faced due to the hospitals tax.

In this fiscal year the estimated net payment from Greenwich Hospital to the state will total $10.6 million, and this payment will only continue to grow unless the tax is eliminated. Although the tax was originally intended to collect and redistribute funds, hospitals are getting back very little in return for paying the state a total of $349.1 million annually.

Today’s Finance Committee Public Hearing held at the Legislative Office Building in Hartford gave the community an opportunity to testify on the bill concerning elimination of the hospitals tax. The hearing included supporting testimony from Greenwich Hospital President Frank Corvino and Representative Camillo.

“The Hospital industry suffered from last year’s budget cut, which imposed a tax of $336 million on hospitals over the biennium,” Corvino said in his testimony. “Last year, the combined decrease in funding for YNHHS [Yale New Haven Health System] was nearly $40 million. This year, YNHHS affiliates [including Greenwich Hospital] will share a $52 million reduction. And, in 2015 we will pay over $75 million in taxes. We’ve done extraordinary things to minimize the impact to patient care. But it is very challenging.”

“Altogether, in the last year, Connecticut hospitals have eliminated more than 1,400 jobs, reduced staff salaries and benefits, reduced some services, and postponed investments in technology and infrastructure. This is having a negative effect on the state economy,” said Corvino.

The legislation would implement a gradual elimination of the tax beginning in fiscal year 2015 until fiscal year 2019 when the tax will be completely eliminated. In fiscal year 2015 the amount due from each hospital would be 80 percent of the hospitals tax paid during fiscal year 2012. In each subsequent year, the hospitals tax would continue to decrease by 20 percent until there is no tax to pay.

“This bill, if passed into law, would gradually phase out this tax over five years. This is a cautious, measured, and prudent way to eliminate a tax that has hurt the delivery of healthcare services in our state,” said Representative Camillo.

By eliminating this tax, hospitals could apply the funds saved towards new advancements as well as towards maintaining and growing jobs.

“Hospitals not only provide important care to communities, but they also create many well-paying jobs that support thousands of middle class families in Connecticut. By reducing the tax burden on hospitals they will have the ability to grow as both an employer and a care provider,” said Senator Frantz.

Representative Walko also emphasized the importance of this bill in light of the impact of the Affordable Care Act.

“We have heard from doctors and health care providers that the Affordable Care Act has resulted in the unintended consequences of shifting many costs to the consumers,” said Representative Walko. “This bill seeks to mitigate one cost passed along to the very group that the Affordable Care Act seeks to support, the consumer, and in eliminating the tax burden from the hospital, they will be capable of providing additional employment opportunities within Greenwich.”

For more information about this bill throughout the legislative session, please visit the Connecticut General Assembly website.