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Hospitals press N.H. lawmakers to eliminate tax

New Hampshire hospitals told lawmakers yesterday to eliminate a tax on their revenue that they say is putting them at a competitive disadvantage and affecting the delivery of health care to patients.

Hospitals began paying the 5.5 percent tax in 1991 so the state could gain matching Medicaid funds to pay for caring for the poor. For many years, they got all their taxes back dollar-for-dollar in a refund from the state. That changed in 2011 when the federal government said states could no longer give hospitals the taxes back dollar-for-dollar and had to apply a formula that distributed the money according to hospitals’ Medicaid costs. The Legislature then cut Medicaid funding to the hospitals by more than $130 million but maintained the tax.

In a letter to lawmakers considering changes to the tax, 23 hospital CEOs argued that the tax is having a profound effect on the ability to maintain a sustainable health care system.

“This tax increase was levied on institutions already under financial stress,” they wrote.

The hospitals also argue they are at a disadvantage because labs, free-standing surgery centers and other facilities aren’t subject to the tax.

“Health systems from neighboring states anxious to serve New Hampshire patients in their facilities carry no similar financial millstone,” they wrote. “If left uncorrected, more and more patient care will migrate out of state with professionals and other employees quickly to follow.”

The hospitals say if the tax isn’t eliminated, payments to reimburse them for the uncompensated care they provide must be maximized. And they said all the money should go to the state’s Medicaid program, not the general fund.

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