| August 25, 2010

Tax ruling a win for transparency, taxpayers

OCPA has consistently warned against a policy of financing government through "backdoor taxes" disguised as fees. Oklahoma government already has more than its share of questionable fee-supported programs. It's just plain common sense that if a business is charged a fee that doesn't fulfill any regulatory requirement and for which the business receives no service, it's a tax.

The one percent “fee” on health insurance claims that was passed in HB 2437 to help fund Medicaid always looked like a tax to us, and yesterday’s Oklahoma Supreme Court ruling vindicated that belief.

While big-government proponents will decry the loss of funding for Medicaid, this is in fact a win for all who seek transparency in government. When government programs hide funding sources in fees that end up being passed on to the general population, the citizen never knows just how much they actually paid to provide that program. This “fee” is a perfect case in point. Your insurance company would have had to pay a one percent charge on every claim that they paid on your behalf. We doubt anyone is naïve enough to believe that the insurance company is not going to pass that one percent on to consumers in the form of premium increases. All Oklahomans with private insurance would have been paying an additional fee to finance Medicaid.

Incidentally, why this infatuation with funding Medicaid? Have people forgotten that Medicaid, as health care scholar Grace-Marie Turner reminds us, is “the government-run health program that provides the worst care in America”? The goal should be to have fewer people on Medicaid, not more. Medicaid, Reason magazine’s Peter Suderman writes, is a program “in which medical access is severely limited, that is racked by uncontrollably rising costs, and that in many instances results in demonstrably worse health outcomes than having no insurance at all.”

In any case, we understand that this “fee” had its birth in the frustration of the recurring reimbursement-rate squeezes that Medicaid providers have endured. Hospitals in particular have borne the brunt of the financial burden of providing Medicaid services. One can understand their frustration at watching other segments of the health care industry, such as elective surgery, prosper while they were struggling to operate in an environment where they were obligated to provide services for which they were typically underpaid. However, this back-door tax was not the solution for the problem.

We agree with the state’s largest newspaper, The Oklahoman, which opined today that “SQ 640 has scared off tax increase supporters through the years. The latest court ruling will likely ward off attempts to increase fees in lieu of tax increases.” That is certainly good news.

And we also don’t mind noting, as The Oklahoman did today, that “the fee that was ruled to be a tax was supported by a majority in the Republican Legislature. [Insurance Commissioner Kim] Holland, a Tulsa Democrat, shot it down single-handedly.” When will the party of “limited government” ever learn?

OCPA has advanced a number of alternatives (here, for example) to current health care problems, and we encourage lawmakers of both parties to revisit those approaches.

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