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Legislators reach no accord on shortfall in hospital tax

State House Bureau

May 28. 2014 8:25PM

CONCORD — House and Senate negotiators have yet to reach agreement on a plan to address a $185 million budget shortfall created when two courts ruled the state’s tax on hospitals was unconstitutional.

Negotiators met for about 45 minutes Wednesday and then adjourned to meet again this morning when “We have something to work with in front of us,” said conference chair Sen. Bob Odell, R-New London.

Representatives from the state’s hospitals, Gov. Maggie Hassan and legislative leaders have been meeting privately trying to reach an agreement that Hassan says has to protect the state’s budget and the state health care system, and returns uncompensated care to hospitals.

House and Senate negotiators face a Friday afternoon deadline to reach an agreement.

Tuesday the conference committee heard from House members on their proposal to shore up the state’s claim that the Medicaid Enhancement Tax on net hospital patient services is constitutional and allowed under both federal and state law.

The plan redefines several classes of taxpayers and would have all the money collected from hospitals go into a special fund used only for health-care services and not the state’s general fund.

The changes should reinforce the state’s legal contention that the tax is constitutional, said Deputy House Minority Leader David Hess, R-Hooksett.

Odell distributed the Senate’s goals for the issue, which include the constitutionality angle, reduce the MET tax rate from its current 5.5 percent, use all MET revenue for health care and provide predictability for the state and hospitals.

Two superior courts found the tax unconstitutional because it taxes only hospitals for services provided by other entities such as private laboratories, private physician practices and ambulatory surgical centers.

While the state collects about $185 million a year through the MET, some of the money is used to pay Medicaid providers and to help hospitals with uncompensated care costs. About $72 million a year goes into the state’s general fund.

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