Saturday, March 28, 2009

Who said health care reform?

Last week a local brewery stopped plant operations briefly to show concern about the proposed increase in New York State's excise tax on beer.

It’s hard to know what taxpayers might think about increasing the beer tax. Most people don’t know about it, and that is probably the point. Hidden taxes are below the radar of taxpayers who otherwise focus on income tax, sales tax, or property tax.

Who knows about hidden taxes on health care? The state has proposed an invisible tax on hospital revenues, something like a sales tax on every dollar a hospital collects. Significantly, this is not a tax on a hospital's "bottom line." Many New York hospitals don't even have a positive bottom line.

The impact of the state's proposed hospital tax, along with the proposed cuts on hospital payments, now appears much worse than it did a few months ago. According to Healthcare Association of New York State (HANYS), new figures from the Department of Health show Community General Hospital will lose some $2.2 million (far more than the $636,000 loss estimated last December). [1]

The accompanying chart shows the result of hidden taxes and state cuts on all four Syracuse hospitals. Together these hospitals will lose nearly $9 million under the proposed state budget. To see the impact of the budget on any hospital in New York, go to this site.

There are also hidden taxes on health insurance. I was surprised to learn this week just how much they are. The health insurance tax represents the fourth largest source of income for New York State. The following information comes from Excellus, updated as of March 10.

Major sources of NYS taxes, last year
1. Personal income taxes, $36.27 billion
2. Sales and use taxes, $11.301 billion
3. Corporation franchise taxes, $ 4.265 billion
4. Private health coverage taxes, $3.177 billion
5. Petroleum business taxes, $ 1.184 billion

After the proposed increases, health insurance taxes will move to the third largest source of state revenue, at $3.75 billion annually. [2]

Taxes on hospital revenues...increased taxes on health insurance. Did someone say, “health care reform?”

[1] The state’s proposed cuts and taxes will cost Community General about $200 for each patient admitted to the hospital.

[2] Excellus estimated the state’s hidden taxes would add some $400 to the cost of treatment for a woman diagnosed with breast cancer who has a lumpectomy and follow-up cancer care.

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