A federal judge has ruled that hospitals and other healthcare providers in Minnesota may list a special 2% medical services tax on the bills they give patients without fear of criminal penalties.
Legislation passed in 1992 lets providers pass the tax along to consumers and their insurance companies, but it prohibits them from listing the tax on patients' bills. The law, part of the state's universal health plan known as MinnesotaCare, also permits criminal penalties against any provider that itemizes the levy on patient invoices.
The ruling represented the first successful legal challenge to MinnesotaCare, an ambitious healthcare reform law that is intended to create large medical groups that will compete to provide services to large groups of consumers.
As of Jan. 1, non-hospital providers were required to begin paying the 2% levy. Hospitals have been paying the tax since Jan. 1, 1993-in its first 11 months, nearly $30 million has been collected.
Proceeds from the tax, which is levied on the gross revenues of healthcare providers, are being used to help pay for coverage for many of the state's 400,000 uninsured and indigent residents.
In November, three physicians, a pharmacist and a dentist filed a lawsuit challenging the state's right to prevent them from itemizing the amount of the tax that they're passing on to patients. They said the prohibition constituted a "gag rule" that violated their right to free speech.
On Dec. 30, U.S. District Court Judge David Doty ruled that portion of the bill was unconstitutional and agreed with plaintiffs that it was "a cynical attempt by the Legislature to avoid responsibility for creating a new tax."-Paul J. Kenkel