Hidden state taxes are the main cause of high health insurance costs

Once upon a time, the Sunday section of the comic newspaper “BC” showed a caveman watching a dinosaur sleep behind a rock. The caveman pulled a thorn from a bush, ran towards the dinosaur, stuck the thorn in his foot, and ran behind the rock. The dinosaur woke up in terrible pain and jumped around with its other feet. Then the caveman reappeared, calmed the dinosaur down, and removed the thorn, earning the dinosaur’s eternal gratitude and devotion.

A caveman, who was watching from behind a rock, called out: “My boy, you are ready for politics.”

That comic strip was to be Exhibit A at a hearing last week by the state Department of Insurance on the use of two health insurance companies to raise rates by nearly 20%.

Politicians denounced the increase as unfair and unreasonable, as if almost everything were not inflationary and as if the real inflation was no more than doubling the 9% rate at which the US government was making exorbitant amounts of money.

Inflation shocks are even bigger with health insurance in Connecticut. This is because for 10 years the government has imposed a tax on hospitals that has taken away hundreds of millions of dollars more than the state government has returned to help the needy. Additional medical tax revenue has been used for public purposes.

To make up for the losses incurred by the state government, hospitals have raised prices for paying patients, many of whom are covered by insurers, who have raised their costs.

Unlike the federal sales tax, the medical tax does not appear on patient loans or insurance. People mistakenly think that all the money they pay goes to the hospitals and insurance companies. The tax burden is hidden in the prices.

This means, the government has used the hospital tax to turn the hospitals and insurance companies into a political case for public money, just as the government has been using the “gross receipts tax” on oil products. Although federal and state taxes on gasoline sales are known and published, the “gross receipts tax” is not. People don’t know it exists and they mistakenly think that the big oil companies are getting all the money they use at the pump without sales tax. Again, the “receipt tax” is hidden in the prices.

To the credit of Governor Lamont, In order to solve the problem of the high cost of hospitals, two years ago the state government admitted that its medical tax revenue was too high, and the state began to reduce taxes and increase the reimbursement of hospitals to patients, just as this year the state government temporarily cut sales. gasoline taxes when gas prices went up.

But the government is still using the hospital tax to raise money for all purposes – which is estimated this year to be $49 million more than the government’s reimbursement to hospitals for indigent patients – thus turning the blame on hospitals and insurers to pay the government.

Although many of Connecticut’s hospitals are not-for-profit, they remain a major source of state tax revenue. Yale-New Haven Hospital recently claimed to be the highest tax payer in the state. But it’s a fair question whether nonprofit hospitals should be taxed at all, except for those tax shelters.

Connecticut hospitals have another financial complaint against the state government. It’s that their reimbursements to patients — people on Medicaid — are half of what Medicare pays and less than the actual cost of treatment. Hospitals estimate that the minimum cost to Medicaid patients last year was more than $900 million. This small payment is actually another hidden tax, which is ultimately paid more by the health insurers.

Yes, the insurance company and the hospital authorities they are often overpaid. But when they do, they pay much higher taxes, and the increase in their paychecks pales in comparison to the government’s hidden taxes on hospitals and health insurance.

The government’s move to hospitals that should be its money should be part of the discussion on medical insurance rates, although the insurers will not say this, fearing retaliation from elected officials if the secret of their hidden taxes is discovered. outside.

Chris Powell is a columnist for the Journal Inquirer. His views are not necessarily those of the newspaper.