Debate begins over health care tax

Rep. kurt Daudt and other House Republicans said Tuesday the 2 percent tax on health care providers should end as scheduled at the end of the year. Tim Pugmire | MPR News

The health care debate that dominated last year's campaign season picked up again Tuesday at the state Capitol just a week into the 2019 session, as Republicans and Democrats held dueling news conferences over a health care tax that is set to go away at the end of the year.

A 2011 law set the sunset date for the 2 percent tax, which was originally enacted back in 1992 to fund MinnesotaCare, the state subsidized insurance program for the working poor. Most of the money for the program now comes from Washington under the Affordable Care Act and from premiums paid by those in the plan, but lawmakers have used the tax to fund other health care programs.

Gov. Tim Walz and DFL lawmakers want to keep the tax in place as they look to expand MinnesotaCare with a buy-in option.

House Minority Leader Kurt Daudt of Zimmerman said the tax should end as planned, and the DFL's proposed reversal would increase health care costs.

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“That’s exactly the wrong approach. We feel that you don’t make health care for Minnesota families more affordable by raising the cost of health care. We feel that would be a broken promise by Democrats.”

The tax generates more than $600 million a year.

Money could be found elsewhere to keep current programs funded, said Rep. Joe Schomacker, R-Luverne. Schomacker said he wants to tap the $1.5 billion projected budget surplus and find savings within the health and human services system.

“If the DFL majority is ready to get serious about eliminating waste, fraud and abuse in public programs and ensuring that taxpayers are being treated fairly, I’m confident that we can come up with a substantial portion of the revenue needed to continue the MinnesotaCare program.”

Democrats defended their plan for preserving the tax, which they insist is not a tax increase. House Majority Leader Ryan Winkler of Golden Valley warned that the loss of the revenue would have dire consequences on critical health care programs.

“We cannot afford to approach this with magic. We need to use math, and the math doesn’t add up in the Republican plan.”

DFL Representative Tina Liebling of Rochester, the chair of the House health and human services finance committee, noted that Republicans have relied on money from the tax in the past, including the funding of a reinsurance measure two years ago.

“If this fund was to go away, we know that by the end of 2022 we would be in deficit. The problem there is that big expenses that are now being paid for would then have to be paid for by the general fund.”

Democrats had a chance to preserve the tax in 2013 and 2014 when they were in charge of the House, Senate and governor's office. But Liebling said most of their attention then was on implementation of the Affordable Care Act.

Liebling is the chief sponsor of legislation to allow a buy-in option for the MinnesotaCare program. Walz supports the concept. But it faces strong resistance in the Republican-controlled Senate.