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Hospitals back tax hike after agreement with Malloy

Hospitals back tax hike after agreement with Malloy

The Connecticut Hospital Association has backed a proposed increase in the hospital tax, changing their stance on the the hike and saying it could benefit both their members and the state with increased federal reimbursements.

More important, according to CHA and Gov. Dannel P. Malloy’s office, is that the agreement shows progress in a relationship that has often been contentious.

“This agreement represents real, structural change and will build on the state’s relationship with hospitals, which will in turn benefit patients and our entire healthcare system,” Office of Policy and Management Secretary Benjamin Barnes said about the proposed hike, which was in a budget deal slated for a vote Thursday.

The budget, if approved, would increase the hospital tax from 6 percent to 8 percent, with the state reimbursing the state for its tax payments. The hospital association initially opposed the proposal, raising concerns that it would just be a repeat of what happened when the tax was first instituted in 2011.

The CHA accepted the tax on an assurance that the state would reimburse hospitals for the payments. The tax levies, meanwhile, also the state to receive larger medicaid reimbursements, which it shared with hospitals.

The state stopped making those initial payments back to the hospitals in subsequent years, though, instead keeping the tax revenues to balance the budget. The legislature has also approved an increase from the initial tax rate since that time.

This year’s budget proposal includes assurances that the hospitals would receive a full reimbursement for their tax payments, although the details were not released publicly Thursday.

This afternoon, we reached an agreement that will provide much-needed funding to care for Connecticut Medicaid patients,” CHA CEO Jennifer Jackson said. “It will help preserve critical healthcare jobs, and it recognizes that hospitals are foundational to our state’s economic health.”

Under the budget, hospitals would see an additional $550 million in revenue each year. That includes receiving two-thirds of the $360 million in federal health care funding that the state could get because of the plan.

The state would then reduce the tax after the biennium.

The agreement comes while a lawsuit from the CHA remains pending challenging the the legality of the hospital tax, saying the increased costs and poor Medicaid reimbursements have forced them to reduce their staff. The initially made its case to the Department of Social Services, but DSS upheld the tax.

Malloy, meanwhile, has criticized hospitals for their spending, particularly executive compensation, while the CHA has often clashed with Malloy of mid-year cuts to other funding streams in response to budget deficits.

Twitter: @reporter_savino


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