Senator Hwang Votes in Support of Settlement with CT Hospitals and Avoid Litigation Liabilities for the State

HARTFORD – Senator Tony Hwang (R-28) today voted in support of a settlement between the state of Connecticut and the state’s hospitals that will result in the withdrawal of a lawsuit against the state challenging Governor Dannel P. Malloy’s manipulation of the hospital tax system.

“This settlement will help taxpayers avoid a $4 billion potential liability for the state,” said Sen. Hwang. “It was wrong that Gov. Malloy abused the hospital tax system for many years. Promises were broken and hospitals were taken advantage of to balance past budgets, ultimately hurting patients and employees and undercutting stability to our healthcare centers. This settlement recognizes that the last administration’s actions were wrong and it will help taxpayers avoid paying even more for those mistakes.”

The hospital tax was initially designed to be a net gain for hospitals. Hospitals would pay a tax to the state, and the state was supposed to leverage those dollars to attain more federal funding for CT’s hospitals. However, over the years the Malloy administration returned less and less of the money that was promised to hospitals. The hospital tax became a financial burden that took funds away from hospitals and put more strain on health care access and affordability, ultimately it affected patient care in our communities.

“It is my hope that the administration and lawmakers learned from this legal liability situation and will stop passing policies that leave our state open to more lawsuits, like truck-only tolls, because Connecticut taxpayers are the ones who ultimately pay,” said Sen. Hwang. “Hospitals like St. Vincent’s and Bridgeport Hospital do so much to serve all of our communities. This settlement marks a fresh start for the state’s relationship with our hospitals that will ultimately benefit patients and taxpayers alike.”

The agreement also increases Medicaid hospital reimbursement rates by about two percent per year after years of little movement. This will reduce the shortfall that results from Medicare and Medicaid paying hospitals less than the cost of care for beneficiaries of public programs. This will enable hospitals to do more to improve the patient experience, such as investing in capital improvements or pushing fewer costs onto private insurers to work towards drive down the cost of insurance.

The seven-year agreement stabilizes user fee revenues for both the state and the hospitals, and will help fund the state’s share of the Medicaid program and other state programs. This agreement also provides stability in the Medicaid payment system for hospitals and resolves potential state liability. This will give Connecticut hospitals and their employees the stability they need to continue providing care and services to people across our state.