Connecticut hospitals argue for revocation of bed tax

A new study commissioned by Connecticut hospitals shows the state could save as much as $30 million per year if the bed tax used to leverage Medicaid matching payments was eliminated.

The findings are the latest development in an ongoing battle between Connecticut's hospitals and Gov. Dannel Malloy, the CT News Junkie has reported.

Although the state's hospitals are taxed to the tune of $556 million annually, it is leaving as much as $373 million on the table because Connecticut used much of the tax proceeds to fill its budget gaps rather than draw down additional Medicaid funds.

Malloy cut Medicaid payments to the hospitals by $63 million earlier this year, even as the tax has been raised further. Hospital CEOs argued that the cuts would lead to increased waiting times at hospital emergency rooms, but Malloy was apparently undeterred.

The Connecticut Center for Economic Analysis performed the study, which was commissioned by the Connecticut Hospital Association.

But the findings didn't impress Malloy. "The hospitals want to be able to dictate to the people of Connecticut--'you are going to pay us a lot more money,' period," he told CT News Junkie. Malloy added that the hospitals' aggregate net income exceeds $900 million a year.

The Medicaid cuts are blamed on dashing at least one hospital deal--Hartford HealthCare's bid to take over financially struggling Day Kimball Hospital earlier this year.

Meanwhile, if there is no movement regarding how the bed tax is allocated, the state's hospitals have suggested they may take legal action. The hospital association has asked the Departments of Social Services and Revenue Services this week to determine whether the tax is actually constitutional. The hospital association has argued that no agency actually has the authority to set a tax or reconstitute a lapsed tax.

To learn more:
- read the CT News Junkie article
- here's the study via CT News Junkie (.pdf)