Connecticut hospitals want lawmakers to phase out tax [New Haven Register]

Article as it appeared in the New Haven Register

HARTFORD >> They are not giving up.

Hospitals, led by the Connecticut Hospital Association, again will try to convince lawmakers to phase out the tax on hospitals, which it blames for layoffs and program cuts.

Several Republican lawmakers have proposed bills that would eliminate the tax over the next five years.

Whether it advances, however, is problematic given the state’s fiscal issues and the projected $1.3 billion deficit in fiscal 2016 and $1.4 billion deficit in fiscal 2017.

The provider tax had been eliminated, but came back in fiscal 2012 as a means of generating additional Medicaid funds in a year when Connecticut had to deal with a $3.7 billion deficit.

That year, the $350 million tax brought in an additional $200 million from the federal government.

The state kept $150 million and distributed back $50 million to the hospitals, in addition to returning the $350 million to most of the hospitals, although there were some losers.

Since then, the $350 million tax has continued to be levied, but with decreasing amounts returned to the hospitals. They got back $323 million in fiscal 2013; $231 million in 2014; and are scheduled to get back $96 million back in the current fiscal year.

Stephen Frayne, senior vice president of policy at the Connecticut Hospital Association, said the association understands “it will not be possible to get rid of it overnight, although unfortunately, it went into effect overnight.”

He is hoping the issue at least gets to a public hearing. The Finance, Revenue and Bonding Commission on Wednesday agreed to raise the concept.

Michelle Sharp, spokeswoman for the CHA, said the $254 million that does not get reimbursed this year increases the cost of care for privately insured individuals by $123 per year.

A number of Republican state senators have put in bills seeking a phase-out, including Sen. Clark Chapin, Brookfield; Sen. Henri Martin, Monroe; Sen. Tony Guglielmo, Tolland; Sen. Kevin Kelly, Monroe and Sen. Scott Frantz, Greenwich.

Frantz said Stamford and Greenwich hospitals have always lost money in the arrangement.

He said he realizes that the next two-year budget will be “very difficult,” but he remained optimistic that the hospital tax issue will be addressed this session.

“It doesn’t have a lot of logic behind it,” he said, referring to the tax.

Greenwich Hospital President Frank Corvino testified last year that his hospital’s tax bill was $10.8 million.

He said across all hospitals in fiscal 2014, they cut 1,400 jobs, reduced salaries and services and put off investments, according to the NewsTimes.

Vincent Petrini, senior vice president for public affairs at Yale-New Haven Hospital, said Y-NH paid $73.5 million in hospital taxes last year and received $27.8 million back for a cost of $45.7 million.

He said the Yale New Haven Health System paid $102.5 million in taxes in 2014 and received $43.8 million in distributions for a net loss of $58.7 million. The system, besides Y-NH, includes Greenwich Hospital and Bridgeport Hospital.

The Malloy administration argues that there are fewer uninsured patients since the Affordable Care Act went into effect and, therefore, more revenue is available to the hospitals.

State Senate Pro Tem Martin Looney, D-New Haven, said given the state’s fiscal situation, he does not see how the state can forego this revenue source at this point.

As to the hospital complaints that the tax has led to staff cuts, Looney said without seeing their books, he questioned their financial condition and their continuing ability to cover “very high salaries” for administrators. State Comptroller Kevin Lembo did not offer an opinion on the tax issue, but generally said there has to be more transparency from hospitals on their real costs.

Lembo said he won’t entertain a line of argument that posits that hospitals are losing money until “they open their books completely, unfettered, and show us exactly where the money is going; what their related foundations are controlling, how it flows and who gets it. Then we can have a conversation.”

Ben Barnes, who heads the state budget office, testified last year that it was unlikely that the state would switch its priorities for such things as community mental health services and pre-kindergarten to cut the hospital tax. He advised them to look to their high cost areas to find savings, according to CtNewsJunkie.