Doctor tax dropped from Connecticut health reform bill

Washington -- Connecticut lawmakers -- for now at least -- have stripped a tax on doctors out of a measure to expand health care access to the uninsured.

Four Democratic legislators are backing the $900 million Connecticut Healthy Steps bill. The legislation would create a subsidized insurance pool for the 400,000 uninsured state residents, increase Medicaid physician payment by 30% and help small businesses provide health insurance.

The measure had proposed paying for the reforms, in part, with a 3%, $600 million tax on physicians' and hospitals' net revenues. It still includes a $40 million sales tax on elective cosmetic surgery and a 24-cent, $25 million tobacco tax increase.

But the Insurance and Real Estate Committee voted 18-1 last month to remove the proposed physician and hospital tax from the bill for further discussion, said a panel co-chair, Rep. Brian O'Connor, one of the bill's sponsors. "There wasn't a consensus on how to fund [the plan]," he said.

Still, that doesn't mean the tax is dead. It could be revised to apply only to physicians who accept Medicaid patients or reintroduced at a lower percentage, he said. The bill still must pass through four other committees.

Physicians were up in arms over the tax. Connecticut State Medical Society Chair Michael Deren, MD, a thoracic surgeon in New London, said he appreciated state efforts to cover the uninsured, but a "wellness tax" would decrease access to care by further financially burdening physicians.

"We all want to see universal health coverage, but the issue is how you're going to fund that," he said.

After the committee vote, the medical society said it would watch future funding plans for this bill vigilantly. Executive Director Matthew C. Katz said the society is still uncomfortable with the cosmetic surgery tax.

Craig Czarsty, MD, past president of the Connecticut Academy of Family Physicians, said doctors already work extra to help the uninsured and underinsured. He cited Project Access, a program in Waterbury that provides free care to the working poor. "The physicians are doing their part already. We don't need a 3% tax," he said.

The bill would boost Connecticut's Medicaid reimbursement rates for physicians from 50% to 80% of Medicare rates and hospitals from 60% to 90% of Medicare rates.

That increase would have an initial price tag of about $520 million, O'Connor said. He believes physicians accepting Medicaid patients still would have come out ahead, even after paying a 3% tax on net revenues.

Connecticut legislators have introduced at least four other bills that would expand access, but the 35-page Healthy Steps measure is the only one so far to have been spelled out in detail. The others are outlines of one page or less with details to be filled in as they progress in the Legislature.

The most specific of the four would create a universal plan funded by employees and businesses, mandate the purchase of insurance, make insurance more affordable and emphasize preventive medicine.

O'Connor said Connecticut has been inspired by other reform efforts in the Northeast, such as Vermont's Catamount Health and Massachusetts' Commonwealth Connector.

So far the Connecticut State Medical Society has not backed a bill, but the society released principles for health care reform Feb. 18. Some are parallel to the plans in the Healthy Steps measure, including a state-directed insurance buying pool.