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PRIORITY ISSUE: HCRA

Status:
The legislature extended the Health Care Reform Act for two years as part of the budget passed on March 31, 2004.

The Health Care Reform Act (HCRA), first passed in 1997 and amended numerous times since, will expire on June 30, 2005. The Business Council supports changes to HCRA to:

Current Law

The original Health Care Reform Act was passed in 1997 and marked a shift from government rate-setting of hospital prices to market-based pricing. As a transition, the 1997 act imposed taxes on employers to pay for graduate medical education and bad debt and charity care - costs that were formerly imbedded in the government set rates.          

Following amendments to HCRA in 1999 and 2002 those taxes were extended and increased. In addition, new government spending programs were created that now seriously imperil real property taxes throughout the state.  And some of the revenues and spending of HCRA were left off-budget and free from public scrutiny. One key reform adopted in 1997 - statewide hospital report cards - has never been implemented.

Business Council Priorities

Putting HCRA funds on-budget is essential to making the system more accountable to taxpayers and the public and private payers of health insurance. 

A more complete picture of HCRA funding will tell the public a story of a system that over-burdens employers with taxes, provides inadequate information and measurements about what the programs deliver and often pays the same for sub-par care that it does for those who provide excellent care.

The full power of market forces has never been fully unleashed.

If encouraged more, a deregulated market could result in greater regional collaboration and a greater regional imprint on the local health-care system. This could make the system stronger or stabilize it, rather than making it weaker. Rather, we've seen a propensity for government intervention in an effort to make sure virtually every hospital stays afloat. This artificial propping up of institutions invariably leads to a system that is weaker in aggregate.  The Governor's Health Care Reform Task Force has wisely recognized the inherent weakness in this approach and has recommended a Commission to look at rightsizing hospitals and nursing homes that are no longer needed. The state should move expeditiously.

HCRA saddles employers with especially burdensome taxes, especially the tax to fund graduate medical education.  Not a single other state has adopted a tax on business to pay for the education and training of new doctors. The Governor's proposed budget raised the tax even higher. Instead, the graduate medical education tax should be reduced.

We strongly oppose any punishing new tax on businesses, individuals and health plans.

Health insurance needs to be less costly and The Business Council will push for legislation to allow for Freedom Health policies. These higher deductible policies allow employers and individuals to take advantage of Health Savings Accounts authorized as part of the new Medicare Modernization Act. For most employers, no Freedom Health policies equates to no health savings accounts.

The state is poised to invest heavily in capital infrastructure, most notably information technology. This money must be used strategically. One of the reasons given for not closing hospitals is stranded debt. Some of this money should be used to retire the debt of hospitals that are no longer needed.

The initiative of the National Coordinator for Information Technology deserves special attention. The office was created by President Bush. The goal is to make an individual's electronic medical record available at different points of care in the delivery system. HCRA should support this work.