It’s hard to imagine a worse time to support a new tax on hospitals, but legislation being considered in the state Senate will do just that.
The proposed hospital tax in AB 1383 (Jones; D-Sacramento) is being portrayed by supporters as staving off budget cuts. In fact, this new tax will be passed through to patients with private health coverage or who pay out-of-pocket. The tax will not only hit Californians in the midst of the worst recession in six decades, but it will exacerbate already out-of-control health care costs.
Although some hospitals would be able to use the proceeds of the tax to leverage more federal funding, many others from throughout California would receive no benefit whatsoever, and would be forced to raise rates for private patients.
And to add insult to injury, the measure attempts to disguise this tax as a “coverage dividend fee,” which is the most impressive smokescreen for taxes since “revenue enhancements.” Partly because of this creative financing and creative naming, legislative leaders and the Governor are considering using this new tax increase as one of the measures to help resolve the budget deficit.
Less than six weeks ago, California voters sent a clear signal to legislators and the Governor: no more taxes. No matter how the proceeds of this tax would be used, it is still too big a burden on health care costs and ordinary taxpayers. AB 1383 should be rejected.