OPINION: We Must Restore Funding To Our Hospitals

I wanted to follow up with you and provide an update on the current status of the hospital cuts.

Following the announcement of a $190 million decrease in Medicaid payments to hospitals announced by the governor’s office in September, I joined fellow House & Senate Republican lawmakers and representatives from Connecticut hospitals to call for a special session to reject the governor’s proposed cuts, and instead make broad trimmings to the state budget. Weeks later, the governor rescinded $14 million of these cuts, but we know that this is far from enough. It is evident that the instated cuts, in addition to cuts already made in our June budget, will negatively affect Connecticut’s most vulnerable citizens, jobs and our economy.

On Tuesday, December 8, the governor called the legislature in for special session in an attempt to fix the budget deficit, and I’m disappointed to say that Yale Hospital and The Hospital of Saint Raphael will still see a $10 million cut, which is why I voted against the budget put forth by the democratic majority. Furthermore, most if not all hospitals are experiencing similar cuts.

As a society, it is our duty to ensure that our most vulnerable citizens have their basic needs met. I am disappointed to say that we have failed tremendously in this aspect, and it only seems to be getting worse. Furthermore, under Governor Malloy’s leadership, our hospitals have become the target of the state’s financial crisis and sadly, this action comes at the expense of our residents who rely on hospitals in their most difficult and desperate times of need.

These cuts will affect critical patient services at hospitals across the state. There have already been numerous announcements of layoffs throughout medical centers as well as reductions in patient outreach and education programs.

Our hospitals should not be viewed as simply a means of managing the state’s budget deficit. The hospital industry plays a pivotal role in keeping our state running. Hospital employees live here, purchase goods and services here, and pay taxes here. When these employees are laid off, it won’t just be the hospital industry that is affected, it will be our residents that help bolster the economy. These cuts will negatively impact our entire state and we will see the deficit continue to increase.

According to researchers at the Connecticut Center for Economic Analysis, in a study organized by the Connecticut Hospital Association, Connecticut could benefit approximately $30 million per year by repealing the tax on hospitals. The full report can be accessed here.

I think it’s safe to assume that this is just the start of an uphill battle between the state of Connecticut and its 27 acute care hospitals, which get taxed.

Currently, the state taxes hospitals $556 million per year. Initially, the state sought to tax hospitals to increase the amount of federal matching funds the state would receive and then redistribute to hospitals, but that’s not what ended up happening.  Instead, the state has decided to keep more of the money from the hospital tax as it has still struggled to balance the budget.

“The study found that the state is leaving $373 million federal dollars on the table each year by keeping more of the tax than it redistributes. The study also found that if the state returned the money to the hospitals, it would create about 6,600 jobs both directly and indirectly and those jobs would lead to increased sales, income, and other related tax revenue that would generate a surplus to the state of over $30 million annually.”

These numbers don’t seem to be enough for our governor, who stated that hospitals just want $500 million to $1 billion of taxpayer dollars. He continued, “The hospitals want to be able to dictate to the people of Connecticut — ‘you are going to pay us a lot more money,’ period,” Malloy said.

This is simply not true.

He went on to say that the state’s non-profit hospitals gain a profit of approximately $916 million annually and therefore shouldn’t have to depend on taxpayer money to help fund their industry efforts. That’s the amount of profit the hospitals made in 2014, according to the Office of Health Care Access. The Yale-New Haven and Hartford Hospital systems accounted for most of those profits – which leaves behind all the smaller hospitals in Connecticut that are already struggling.

This week, the Connecticut Hospital Association filed letters with the Departments of Social Services and Revenue Services to find out whether the hospital tax is even constitutional. Since receiving their letters, Governor Malloy made a statement indicating that the tax was constitutional and would sustain a legal challenge.

On the other end, the hospital association is standing their ground on the principle that no state agency has the power to set a tax rate, and that only the General Assembly can do so. Also, the association claimed that when the General Assembly reinstituted the hospital tax in 2012, the legislature failed to define a rate.

As your voice in Hartford, I vowed to look out for the best interests of North Haven residents and these cuts go against that promise. Therefore, I refuse to sit idle while these cuts are imposed. I vowed to stand up against unconscionable actions such as these, and I will do just that.

Join me in saying NO to Governor Malloy. Leave our hospitals alone!

As always, if you would like to connect with me, please call: 1(800) 842-1423 or email: dave.yaccarino@housegop.ct.gov .

Sincerely,

State Representative Dave Yaccarino

87th General Assembly District