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State Representative
Erik Paulsen

445 State Office Building, 100 Constitution Ave., St. Paul, MN 55155 (651) 296- 7449

For Immediate ReleaseFor more information contact:
February 19, 1999Eric Lochen (651-296-9895)
NEWS RELEASE
REP. ERIK PAULSEN SUPPORTS REPEAL OF "SICK TAX"

ST. PAUL State Representative Erik Paulsen (R-Eden Prairie) supported a bill which repeals the health care provider tax, otherwise known as the "sick tax." Paulsen, a member of the House Tax Committee, said the bill is likely to be rolled into the Omnibus Tax bill.

"This bill not only eliminates the sick tax, which has been a burden to the entire health care arena, but it ensures that stable funding remains for MinnesotaCare," said Paulsen.

Republicans have long wanted to repeal the tax, which is passed on by doctors, dentists, hospitals and most other health care providers to patients, clients and insurance companies. The tax has also been the sole source of funding for MinnesotaCare since its inception in 1992. Many legislators were initially concerned that the elimination of the provider tax would wipe out MinnesotaCare, but the bill replaces the provider tax with money from the annual payments from the state's tobacco settlement. It would also ensure that MinnesotaCare would tap general state budget dollars if the tobacco settlement payments prove insufficient in the future.

Providers, too, have complained about the tax. Dentists say the tax has driven some of their colleagues to leave Minnesota because of the fact that their patients must bear the full burden of the tax instead of having it passed on to their insurance companies. Several providers also testified that the provider tax is regressive and punitive to the sick.

Paulsen also says the has been administratively cumbersome and costs the state $1.8 million a year just to administer. "Repealing the tax will save money and cut bureaucracy at the Revenue Department."

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