Lots of nasty-sounding taxes have been under fire lately, with Republicans conducting an all-out assault on the "death tax" and the "marriage tax.

Monday, September 18, 2000

Lots of nasty-sounding taxes have been under fire lately, with Republicans conducting an all-out assault on the "death tax" and the "marriage tax." Now, in Minnesota at least, we can add "sick tax" to the list.

For those who thought repealing the estate tax and eliminating the marriage penalty were good ideas, getting rid of the state’s tax on health care should be a real no-brainer.

As taxes go, this one is among the hardest to justify. The state levies the 1.5 percent tax on health care to pay for its state-run insurance program for low-income residents. And it’s scheduled to increase to 2 percent in 2002.

Without debating whether the MinnesotaCare insurance program itself is worthy, it makes sense to say the money to pay for it should not come from a tax on sick people. Sick people already pay enough for their medical care, and the sicker they are, the more they’re already paying.

Most taxes go up when the person being taxed gets richer; with the health tax, they go up when the person gets sicker.

In the economy, all a tax on health care does is drive up insurance costs and deductibles for those with private insurance and strips resources away from plans like Medicare and Medicaid, which are already in jeopardy. In turn, hospitals and clinics, especially in rural areas that depend more on Medicare, can expect less reimbursement from insurers. The cost of health care goes up for everyone.

It’s true that the tax doesn’t amount to a tremendous fee per application, but it adds up. And anything the government can do to ease the health care crisis, if only a little bit, would be a prudent measure.

Democrats say they don’t want to repeal the tax because MinnesotaCare needs a dedicated source of funds. That may be, but just about any other form of tax would be better than a sick tax. They should find something else.

The state’s coffers are bursting with cash, and it’s piling up faster than the Legislature and governor can give it back. Plus, we’ve got big tobacco settlement payments to spend. Eliminating the health tax would be a wise target for those kinds of funds.