May 17, 2017  By Jon Hurst

As the fiscal year 2018 state budget gets closer to implementation on July 1, it is becoming clearer that employers will be asked in some way to help fund a state Medicaid budget gap.  The MassHealth budget has exploded under a combination of ACA related costs, mixed up consumer incentives, and a lack of provider expense control.  And until the state can institute some guardrails, and move some over to more appropriate and affordable options, it appears that employers will be asked to fund some of the increased costs over a two year period. 

Important discussions on the economic impact to small businesses have lowered the dollar ask and have allowed for discussions of better taxing plans, but still absent from the negotiations is skin in the game from the providers themselves.  A proposal to cap commercial rate increases for the big, high cost providers was lost in the flood of unparalleled political power by “non-profit,” non-taxpaying healthcare providers.   They aren’t shy about asking for more money from consumers, employers and taxpayers, but ask them to pay taxes or reduce their expenses, and they pull out all the stops to deflect the conversation.

Some of these providers are among the largest employers in the state, are far wealthier than most “for profit” employers, yet due to their tax status, they pay no corporate income tax, no commercial property taxes, and incredibly, no sales tax.  With their direct tax avoidance they force the rest of us to pay more in taxes.  More taxes, on top of uncontrolled, escalating health insurance premiums.    

Furthermore, they are arguably given by government an unfair advantage under those tax laws compared to their for profit competitors.  Taxes are supposed to not only fund important government services like healthcare, but also create fair playing fields, and incentives to do the right thing.  Truly there is nothing like paying taxes to force you to closely examine your expenses and behavior.  And ideally the tax system should be set up to make sure everyone is treated fairly and equally by government. 

 Some of this tax avoidance I can accept, but not paying the sales tax?  Think about that for a moment.  Every struggling working family and small business owner must pay the sales tax, yet multi-billion dollar entities—some with reserves in the billions—pay nothing to the state when they buy equipment, consumables, meals.

Consumers and small retailers are certainly impacted by the sales tax and it makes them think about their spending, expenses, competition and prices.  Big, non-profit healthcare systems which do not have to report to owners or stockholders, they have little or no incentive to control costs.  They simply keep sending the bill to the consumers, small businesses, and the taxpayers and make them pay it. 

You don’t need to pull their non-profit status to give them a taste of taxation reality; just make them pay the sales tax, just like every working family, consumer, small business owner, and even for-profit healthcare provider in the state.  If we would make big hospital systems pay the sales tax just like the rest of us, not only would it generate hundreds of millions in new state revenue, it would more importantly make them think more like real businesses and real consumers, and force them to manage their spending in a more responsible manner.

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