Chapter 346
2012 -- S 2362 SUBSTITUTE A
Enacted 06/20/12
A N A C T
RELATING TO
HEALTH AND SAFETY -- TAXATION OF HEALTHCARE SERVICES
Introduced By: Senator Walter S. Felag
Date Introduced: February 14, 2012
It is enacted by the General
Assembly as follows:
SECTION 1. Findings. - The
general assembly finds and declares that:
(1)
The state of
and adults and that make available certain services to
children with special needs, as well as
raises general revenue, through taxes and assessments on
premiums for health care coverage.
These are established in
(2)
These premium-based taxes impact the cost of health insurance coverage only for
those Rhode Islanders purchasing fully-insured commercial
insurance (individuals and typically
small to mid-sized businesses). This current method of
raising revenue fails to spread the burden
to other tax payers. Out-of-state payers, self-funded
plans, and self-pay individuals who benefit
from the programs funded by these assessments do not make
payments that support these
services.
(3)
In 2011, the General Assembly, recognizing the importance of ensuring that
these
important programs continue to have a stable and equitable
funding source, directed the health
insurance commissioner to examine these premium based taxes and
possible alternatives for
raising the same amount of revenue.
(4)
Alternatives to the premium based assessments and taxes were evaluated in the
April
20, 2012 report to the
general assembly by the Office of the Health Insurance Commissioner
(OHIC) entitled "A
Study of Alternatives to Health Insurance Premium Assessments." The report
indicated that more equitable alternatives for collecting
revenue for the various programs funded
through these premium based assessments, such as through
placing a surcharge on certain claims
for healthcare services rendered in the state of
Islanders. Several other states have adopted such alternatives
for generating revenue to support
various programs.
(5)
The OHIC, in a report entitled "Private Insurance Enrollment" (also
published in
April 2012) indicated a
steep and uninterrupted decline in the number of Rhode Islanders covered
under fully insured health plans. The report states that
there has been a twenty-two percent (22%)
decrease in fully insured enrollment, or 88,604 fewer
participants since 2005. That means that the
funding base for the health programs described in (1) has
shrunk from 411,044 in 2005, to
322,440 insurance covered
in 2011. As the number of people covered under fully insured plans
continues to decline, the per capita assessment and tax rate
will have to increase to raise the same
amount of revenue.
(6)
In order to consider and ensure an orderly transition of these
premium based
assessments to a claims based surcharge, the general assembly
seeks further information from the
executive office of health and human services and the
department of revenue.
SECTION 2. Comprehensive analysis and implementation plan. –
The executive office of
health and human services and the department of revenue, in
consultation with the health
insurance commissioner, are directed to draft an implementation
plan for transitioning the current
assessments levied upon health insurance premiums, including the
child and adult immunization
assessments, the children's health account assessment, and the
premium tax on health insurers
including non-profit hospital and medical services
corporations, health maintenance
organizations, and accident and sickness insurers, to a surcharge
based on health care claims. The
implementation plan shall include a financial impact analysis, a
timeline for implementation, and
a draft work plan for implementation of such a
surcharge.
The executive office of health and human services should direct the tax
administrator as
to the amounts needed to be raised to fund the
immunization programs for children and adults and
for the child services programs and to continue the
present process under which funds for those
programs would be placed into restricted receipt accounts. The
plan shall also minimize the
burden of administering any collections and payments by
health care facilities.
All
departments and agencies of the state shall furnish advice and information,
documentary or otherwise as is deemed necessary or desirable to
facilitate the purposes of the
analysis.
The
executive office of health and human services and the department of revenue
shall
present an implementation plan including findings and
recommendations to the senate president,
speaker of the house, and chairpersons of the house and
senate finance committees no later than
February 15, 2013.
SECTION 3. This act shall take effect upon passage.
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LC01333/SUB A
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