MMA Viewpoint
Work Group Tackles Sick Tax
The sick tax is a thorn in our side that we’ve struggled to eliminate since it was imposed by the Legislature in 1992.
Our MMA policy is clear: We oppose the tax. However, after 12 years, we need to re-examine our strategy and priorities.
To that end, the MMA created a work group to seek MMA members’ opinions, consider various political scenarios, and submit a report and recommendations to the 2006 House of Delegates.
As you know, the 2 percent tax on revenue from health care services goes into the Health Care Access Fund (HCAF) and is the main funding source for MinnesotaCare, a health insurance program for low-income citizens. From the beginning, the MMA supported MinnesotaCare but argued that it should be funded by a broad-based tax. Librarians aren’t taxed to pay for libraries, school teachers aren’t taxed to pay for schools. The sick tax is intrinsically unfair.
We also argued that it falls most heavily on low-income and sick Minnesotans and adds to the overall cost of health care. An independent survey found the sick tax to be one of Minnesota’s most regressive taxes.
Despite our best efforts to eliminate it, however, the tax remains in place. We’ve won support for repeal—in theory—from many legislators on both sides of the aisle. But when budget discussions get down to the wire, the funds in the HCAF, which tends to run a surplus, prove too tempting for lawmakers to give up. During the last four years, lawmakers have taken more than $400 million from the HCAF for purposes not originally contemplated when the sick tax was instituted.
We’ve vigorously fought transfers of money from the HCAF into the general fund; but sometimes this has put us in the uncomfortable position of opposing the use of this money for proposals that we support. It has also prevented us from actively engaging in discussions about the state’s health care spending priorities.
It’s time to reconsider where we go from here. The Provider Tax Work Group, which includes members of the MMA Board of Trustees and the Minnesota delegation to the American Medical Association, is reviewing existing policies and legislative changes, seeking to understand the relationship between the sick tax and the HCAF, and examining historic HCAF balance sheet data.
One of the work group’s most critical responsibilities is to find out more about our members’ opinions. I think we agree that the sick tax is an inappropriate way to fund MinnesotaCare. But how important is it to you and other members that we repeal the tax? Is it more important to prevent cuts to MinnesotaCare benefits or eligibility than to eliminate the tax? Is it more important to reduce the administrative burden of collecting and paying the tax than to repeal it? Should repeal be the MMA’s top legislative priority? The MMA conducted an e-mail survey asking your opinion on these and other questions. Taking the pulse of our membership’s opinions and expectations will help guide MMA advocacy efforts as we prepare for another legislative session. The work group will consider various scenarios and develop a report and policy recommendations to submit to the 2006 MMA House of Delegates.
The sick tax has been a constant irritant for this organization for a dozen years. It’s time to re-examine how we will deal with it in the future.