Hospital tax fallout changes yet again

A new revision to the proposed tax on hospitals would exempt six hospitals that have struggled financially from a portion of the tax but would reduce the total amount of money hospitals get from the state.

The budget proposal agreed to by Gov. Dannel P. Malloy and Democratic legislators calls for taxing hospitals and redistributing the money, which generates federal matching funds that the state can use to balance the budget. The Malloy administration has revised the tax formula multiple times, most recently to ease the burden on hospitals that have had net losses over the past five years.

Under the latest plan, hospitals would pay $331.2 million in taxes and receive $363.4 million back. The state would keep $149.5 million in federal matching funds. Overall, hospitals would end up with $32.2 million more than they pay, $18.3 million less than under the previous tax plan. Sixteen hospitals would get back more money than they pay, while 12 would lose money, although the size of the losses has been reduced from the previous plan.

The change has shifted the financial implications for many hospitals. Danbury Hospital and St. Francis Hospital and Medical Center would have gained money under the previous plan but would lose money under the latest version. Johnson Memorial, New Milford, and Waterbury hospitals and The Hospital of St. Raphael would have lost money under the previous version and are now projected to gain.

Hospitals have lobbied against the tax. The budget proposal also eliminates nearly $83.3 million in funding the hospitals receive to help cover the cost of treating uninsured and underinsured patients, and hospital leaders want the state to offset the changes by providing funding for the hardest hit hospitals and sunsetting the tax.

The Malloy administration has said that hospitals have benefitted from increased funding for treating low-income adults over the past year. Including those payments, only three hospitals end up worse off under the total budget plan, according to the administration. Hospitals say they still lose money on those low-income patients.