With Budget Deadline Looming, State’s Fiscal Crisis Weighs On Hospitals Facing Tax Hike

June 21, 2017

Connecticut’s hospitals, wary about the round-and-round state budget talks that could add hundreds of millions of dollars in tax increases to the healthcare industry, have released a television advertisement that calls on legislators to “stand up and strengthen our care.”

Gov. Dannel P. Malloy and legislative leaders face a June 30 deadline to agree on a budget for the next two fiscal years amid a $5.1 billion shortfall. Malloy earlier this year proposed that hospitals, which already pay $556 million in state taxes each year despite their not-for-profit status, also pay property tax on their land and buildings to towns and cities. The Hartford Courant labeled the tax “extortionate” in a March editorial that said higher taxes would also result in higher premiums, co-pays and deductibles for insured patients.

The advertisement, created by the Connecticut Health Association’s Care We Can Count On, encourages legislators to “vote for a budget that helps hospitals.” (It first appeared this week on local television stations.) The association says the hospital tax would cost 3,000 jobs statewide, with extended wait times and fewer patient programs and services.

Hospitals, for 200 years, were tax-exempt until 2012. Their tax burden is now close to 30 times the corporate tax rate of 9 percent. The tax was designed as a legal maneuver to qualify for $200 million in federal Medicaid payments after hospitals paid $350 million in taxes and the state returned $400 million in payments to hospitals. This year, however, it’s estimated the health-care industry will pay $556 million to the state and receive only $118 million in payments from the state. Because the state is not expected to return at least $556 million, it will not qualify for federal Medicaid payments.

For more information on the Care We Can Count on campaign, click here.