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Chris Powell: Taxing illness and overpaying hospital execs

Chris Powell is managing editor of the Journal Inquirer, in Manchester, Conn.

Get sick enough to go to the hospital in Connecticut and you inevitably fall into a web of political deception and corruption.

It’s not just the cost-shifting and concealment that government long has imposed by requiring hospitals to treat the indigent for free, recovering those costs by charging more to paying patients and their insurers, a policy that taxes serious illness and converts hospitals into tax collectors.

In recent years the scheme has grown. Lately state government has been taxing hospitals directly. At first this taxation of hospitals was undertaken in the name of obtaining higher medical reimbursements from the federal government, reimbursements that were to be passed along to the hospitals themselves.

But then state government started keeping the reimbursements for itself, spending the money on other things. Thus the hidden state tax on serious illness grew and, with it, the function of hospitals as tax collectors.

So the public blames rising medical costs on hospitals and insurance companies, not the sneaky elected officials also responsible. State government long has used a similarly dishonest system with electric utilities, requiring them to provide service to the indigent for free and to recover the expense by charging paying customers extra. This policy drives up electricity bills and turns utilities into tax collectors as well, but again elected officials escape the blame; instead it falls on the utilities.

Some state legislators seem to have noticed such policy only recently, but at a General Assembly hearing in February, Gov. Dan Malloy’s budget director, Ben Barnes, was remarkably candid about it. Asked why state government is taxing hospitals, Barnes replied by quoting the career criminal Willie Sutton. When Sutton was asked why he robbed bank, he replied: “That’s where the money is.”

It’s funny that Democrats who purport to sympathize with working people countenance secret sales taxes on the necessities of life. At least these taxes should be shown plainly on hospital and electric bills just as sales taxes are shown on other bills.

Of course, the Democrats’ expressions of concern for working people are just for show. Their main concern is only to feed the machine of government, particularly to sustain the compensation of government’s employees, their party’s base.

Hence Connecticut has not only gotten these secret taxes on serious illness and electricity but soon will have more gambling, on account of provisions in the state budget just passed by the Democratic majorities in the General Assembly – “satellite” casinos to divert the state’s gamblers from new casinos out of state, and the casino game keno, to be installed on computer terminals in bars, more mechanisms for taxing the working class and poor.

Still, state government isn’t the only one exploiting hospitals. They also are being exploited by their own executives, who claim salaries in the hundreds of thousands and even millions of dollars.

While Hartford Hospital has begun laying off hundreds of employees at its facilities around the state, Journal Inquirer Staff Writer Don Michak reports that the hospital recently paid bonuses ranging from $45,000 to $498,000 to 16 executives who were already earning between $300,000 and $2.1 million a year.

Defending such salaries, hospitals say they need to compete for top talent in the market. But just as it is the biggest purchaser of higher education, government makes the market in medical care, too, and government could control excessive salaries in both college and hospital administration any time it wanted to by conditioning its purchases on salary restraint.

While the Malloy administration has injected itself into a hundred trivial things without ever managing to stop the collapse of state government’s finances, it still hasn’t gotten around to the excessive college and hospital executive salaries that state government pays for.


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