Westchester & Fairfield County Business Journals 012918

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JANUARY 29, 2017 | VOL. 54, No. 5

YOUR ONLY SOURCE FOR REGIONAL BUSINESS NEWS

westfaironline.com

CT hospitals chief sees little good in state and federal actions BY KEVIN ZIMMERMAN kzimmerman@westfairinc.com

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nresolved issues at both the state and federal level have left John Murphy, president and CEO of the Western Connecticut Health Network, feeling a bit flustered. “I don’t see a lot of good news out there, truthfully,” he told the Business Journal. Chief among Murphy’s concerns is the ongoing legal battle between most of the state’s hospitals under the Connecticut Hospital Association umbrella and the state of Connecticut regarding the controversial hospital tax. While the state has asked a judge to dismiss the CHA lawsuit filed in 2016 in New Britain Superior Court, the hospital association has asked for a trial date to be set. The CHA seeks to have the hospital tax as currently constructed declared unconstitutional and void. The hospitals want input on any new hospital tax that would follow to make it less onerous and to ensure that the taxes collected go to health care, not the state budget. At issue is the fact that the biennial state budget passed last year increases taxes on hospitals by nearly double, from $556 million to $900 million per year. The hospitals paid approximately $438 million more in taxes last year than they received back from the state; that figure is expected to decrease to about $228 million this year. » HOSPITALS

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Business of sustainability page 19

Analiese Paik, left, and Amy Kalafa, co-founders of Sustainne LLC, which connects consumers with Fairfield County businesses that follow sustainability principles. Photo by Phil Hall

Cuomo aims to tax health insurers’ ‘windfall’ BY RYAN DEFFENBAUGH rdeffenbaugh@westfairinc.com

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aced with potential cuts to federal funding of major health programs, Gov. Andrew M. Cuomo in his budget address this month proposed a new state fund aimed at keeping the programs afloat. Speaking in Albany on Jan. 16, Cuomo said it’s health care “where the real potential shortfall is.” The state is facing a potential loss of federal funding through a number of avenues outlined in

the governor’s budget, including cuts to Medicaid; the loss of the cost-share reduction payments that fund the state’s popular Essential Plan coverage option; and cuts to the Medicaid Disproportionate Share Hospital program, which provides federal dollars to hospitals that serve a high percentage of Medicaid or uninsured patients. Cuomo also said federal funding for the Child Health Insurance Program was at risk in his budget outline, but the program subsequently has been funded through the next six years when Congress passed a

short-term spending bill on Jan. 22 that included funding for the popular CHIP program. In his speech, Cuomo acknowledged the budget difficulty and uncertainty ahead. He proposed setting up a $1 billion reserve fund to offset any loss in federal funding. “Depending on who you talk to, they say they’re going to be restored, they’re not going to be restored,” Cuomo said of federal health care program cuts. “If they’re not restored, they are in the billions of dollars and affect millions of New Yorkers. So, it’s something that’s going to change over time and that we have to watch, but we would set up the reserve fund now.” To help launch that Healthcare Shortfall Fund, Cuomo proposed new taxes targeting the state’s health insurance industry. The state is facing

an overall budget shortfall estimated at more than $4 billion. “It’s just too big a deficit and the choice of cutting education or cutting health care, I don’t think is a place anyone wants to go this year,” Cuomo said. “So we have to raise revenue.”

INSURER CONVERSIONS

The shortfall fund could be kick-started initially by a new source of revenue the Cuomo administration estimates will be $500 million annually for the next three years. That money would come from nonprofit health insurers that convert to for-profit ventures. While not a new tax, the state is counting on there being more of this type of transactions from which to draw revenue in the next few years. “This is about not-for» TAX

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