Bristol Hospital and the Connecticut Hospital Association (CHA) are urging the General Assembly to reject Gov. Ned Lamont’s efforts to deviate from a 2017 hospital agreement that would have phased out a hospital tax.
In February, Gov. Ned Lamont released his fiscal year 2020-21 budget. The $43 billion two-year budget proposal attempts to address an estimated $3.5 billion deficit.
“Even though it’s early in the budget process, we hope the administration realizes that the hospital tax is not a solution to the state’s budget problems,” said Christopher Boyle, director of public relations, Bristol Hospital and Health Care Group Inc.
“Apparently, Gov. Lamont wants to cancel an agreement that was already in place that would have reduced and eventually phased out the tax over the next few years. He actually wants to replace that plan with a $43 million increase,” Boyle said.
“Last year, Bristol Hospital was charged just under $14 million in taxes,” he noted. “The state also cut our Medicaid rates unilaterally last October due to a mistake that is resulting in millions of dollars of underpayments. There has been no resolution to this costly error.”
“All of this can all affect our ability to address community needs for access to health care services and key investments in technology and facilities,” he said.
“One thing that we are grateful for is the longtime support of the Bristol delegation” to the state legislature, he added. “They have always advocated for the health and well-being of our patients and families. And we know they will be once again be by our side during this legislative session.”
In 2017, Connecticut faced operating deficits projected to be as high as $317 million in the current fiscal year and $3.5 billion over the next biennium, according to background information from CHA.
“At the same time, Connecticut hospitals were plagued by an onerous hospital tax that was never intended to be a direct tax on healthcare services. When the tax was originally established, the state intended to use the revenue collected to make supplemental benefit payments to hospitals for healthcare services provided to patients enrolled in the Medicaid program. These supplemental payments would qualify the state for increased federal reimbursement,” according to CHA.
However, then-Gov. Dannel Malloy’s administration “abandoned this strategy within a year of its adoption, and opted instead to keep larger and larger portions of the tax payments received from hospitals while reducing supplemental payments to hospitals, thus foregoing the opportunity to qualify for increased federal funding,” according to CHA.
CHA states, “rather than shying away from the dual challenges of (1) placing government on a path forward to fiscal stability and (2) addressing what had become a direct tax on healthcare services, Connecticut hospitals stepped forward and volunteered to work with legislative leadership and the administration. The results were an historic bipartisan three-year agreement – one that received overwhelming support from a majority of members of all four caucuses and one Connecticut hospitals continue to support strongly.”
“The 2017 agreement has helped address the chronic and persistent operating deficits in the state budget by enabling the state and hospitals to benefit from increased federal reimbursement, while diminishing the state’s reliance on a direct tax on healthcare services,” CHA stated.
The governor is proposing to abandon the agreement between hospitals and the state during its third and final year, CHA said. “If enacted into law, hospitals will experience a $516 million increase in the hospital tax, with a corresponding reduction in supplemental payments amounting to $43 million – to $453 million.”
In his budget address, Lamont noted, “I am going to sit down with legislative leadership and the hospitals to restart a more collaborative conversation about their role in ensuring Connecticut’s physical health and fiscal health.”
In response, Jennifer Jackson, CHA CEO, released the following statement:
“We are strongly opposed to the proposed budget. The current administration is not honoring the bipartisan agreement for this year or next year, and the budget makes additional cuts to hospitals,” she said.
“Hospitals and health systems are key to the state’s economic recovery and employ more than 100,000 people in Connecticut. We continue to be willing partners to find a sustainable solution, but this is not it,” Jackson added.
The governor’s budget has been referred to the General Assembly’s Appropriations and Finance and Revenue Bonding Committees for review and action, and the committee will hold a series of public hearings over the coming weeks.
Susan Corica can be reached at 860-973-1802 or scorica@bristolpress.com.