Hidden state taxes are behind high medical insurance costs Chris Powell

Long ago a Sunday installment of the newspaper comic strip “BC” depicted a caveman peering mischievously at a sleeping dinosaur from behind a boulder. The caveman pulled a thorn from a bush, walked up to the dinosaur, stuck the thorn in his leg, and ran behind the rock. The dinosaur awoke in excruciating pain and jumped to its other leg. At which the caveman reappeared, pacified the dinosaur, and removed the thorn, earning the dinosaur’s eternal gratitude and devotion.

Another caveman, peering from behind another rock, called out: “My boy, you are ready for politics.”

That comic strip should have been Exhibit A at a state Insurance Department hearing last week in a petition by two medical insurance companies to raise rates by about 20%.

Politicians denounced the increase as unfair and unconscionable, as if the prices of almost everything were not exploding and as if the actual inflation rate was not at least twice the heavily doctored official rate of 9% amid the US government’s excessive money creation.

The inflation paradox is even greater with medical insurance in Connecticut. That’s because for 10 years the state government has taxed the hospitals that billions of dollars have been returned to them by the state government for care of the indigent. Additional tax revenue of the hospital is used for general purposes of the state government.

To cover the deficit imposed by the state government, hospitals have increased the prices they charge patients, most of whose bills are paid by insurers, which in turn have increased their premiums.

Unlike state sales taxes, hospital taxes never appear on patient or insurance bills. People mistakenly think that all the money they pay goes to those horrible hospitals and insurance companies. The tax burden is hidden in prices.

That is, the state government has used the hospital tax to politically impeach hospitals and insurance companies for the government’s own expenses, just as the state government has long used a “gross receipts tax” on oil products. While state and federal taxes on retail sales of gasoline are known and advertised, the “gross receipts tax” is not. People don’t know it’s there and mistakenly think that the awful big oil companies are getting all the money they spend at the pump except for the retail tax. Again, “gross receipt tax” is hidden in the prices.

To the credit of Governor Lamont, To address the potentially costly issue by hospitals, two years ago the state government acknowledged its hospital tax racket had gone too far, and the state began reducing taxes and increasing hospital reimbursements for welfare patients, just as the state government temporarily cut retail this year. Gasoline tax when gas prices are off.

But the state government is still using the hospital tax to raise money for general purposes — an estimated $49 million more than state reimbursement to hospitals for indigent patients this year — and thereby blame hospitals and insurers for the government’s own costs.

Although most Connecticut hospitals are for-profit, they remain a large source of state tax revenue. Yale-New Haven Hospital recently claimed to be the state’s largest tax payer. However, whether or not nonprofit hospitals should be taxed is a fair question, apart from the ease with which the tax burden can be concealed.

Connecticut hospitals have another financial grievance against the state government. It’s that their reimbursements for welfare patients — people on Medicaid — are only half of what Medicare pays and far less than the actual cost of treatment. Hospitals estimate that underpayments for Medicaid patients last year were more than $900 million. This underpayment is essentially another hidden tax, ultimately paid largely by medical insurers.

Yes, insurance company and hospital executives Often extraordinary payments are made. But when they are, they pay higher income taxes, and the waste of their wages is small compared to the state government’s hidden taxes on hospitals and medical insurers.

Even if insurers don’t sue for fear of reprisals from elected officials when their hidden taxes are revealed, shifting state government’s own costs to hospitals should be part of the discussion on medical insurance rates. outside

Chris Powell is a columnist for the Journal Inquirer. His opinion is not that of the newspaper.

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