1.1                          A bill for an act 
  1.2             relating to taxation; reducing the tax rate on the 
  1.3             gross revenues of hospitals and health care providers; 
  1.4             amending Minnesota Statutes 1994, sections 295.52; and 
  1.5             295.54, subdivision 2; Minnesota Statutes 1995 
  1.6             Supplement, section 256.9352, subdivision 3. 
  1.7   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.8      Section 1.  Minnesota Statutes 1995 Supplement, section 
  1.9   256.9352, subdivision 3, is amended to read: 
  1.10     Subd. 3.  [FINANCIAL MANAGEMENT.] (a) The commissioner 
  1.11  shall manage spending for the MinnesotaCare program in a manner 
  1.12  that maintains a minimum reserve equal to five percent of the 
  1.13  expected cost of state premium subsidies.  The commissioner must 
  1.14  make a quarterly assessment of the expected expenditures for the 
  1.15  covered services for the remainder of the current biennium and 
  1.16  for the following biennium.  The estimated expenditure, 
  1.17  including minimum reserve requirements, shall be compared to an 
  1.18  estimate of the revenues that will be deposited in the health 
  1.19  care access fund.  Based on this comparison, and after 
  1.20  consulting with the chairs of the house ways and means committee 
  1.21  and the senate finance committee, and the legislative commission 
  1.22  on health care access, the commissioner shall, as necessary, 
  1.23  make the adjustments specified in paragraph (b) to ensure that 
  1.24  expenditures remain within the limits of available revenues for 
  1.25  the remainder of the current biennium and for the following 
  1.26  biennium.  The commissioner shall not hire additional staff 
  2.1   using appropriations from the health care access fund until the 
  2.2   commissioner of finance makes a determination that the 
  2.3   adjustments implemented under paragraph (b) are sufficient to 
  2.4   allow MinnesotaCare expenditures to remain within the limits of 
  2.5   available revenues for the remainder of the current biennium and 
  2.6   for the following biennium. 
  2.7      (b) The adjustments the commissioner shall use must be 
  2.8   implemented in this order:  first, stop enrollment of single 
  2.9   adults and households without children; second, upon 45 days' 
  2.10  notice, stop coverage of single adults and households without 
  2.11  children already enrolled in the MinnesotaCare program; third, 
  2.12  upon 90 days' notice, decrease the premium subsidy amounts by 
  2.13  ten percent for families with gross annual income above 200 
  2.14  percent of the federal poverty guidelines; fourth, upon 90 days' 
  2.15  notice, decrease the premium subsidy amounts by ten percent for 
  2.16  families with gross annual income at or below 200 percent; and 
  2.17  fifth, require applicants to be uninsured for at least six 
  2.18  months prior to eligibility in the MinnesotaCare program.  If 
  2.19  these measures are insufficient to limit the expenditures to the 
  2.20  estimated amount of revenue, the commissioner shall further 
  2.21  limit enrollment or decrease premium subsidies. 
  2.22     The reserve referred to in this subdivision is appropriated 
  2.23  to the commissioner but may only be used upon approval of the 
  2.24  commissioner of finance, if estimated costs will exceed the 
  2.25  forecasted amount of available revenues after all adjustments 
  2.26  authorized under this subdivision have been made. 
  2.27     By February 1, 1995, the department of human services and 
  2.28  the department of health shall develop a plan to adjust benefit 
  2.29  levels, eligibility guidelines, or other steps necessary to 
  2.30  ensure that expenditures for the MinnesotaCare program are 
  2.31  contained within the two 1.25 percent taxes imposed under 
  2.32  section 295.52 and the gross premiums tax imposed under section 
  2.33  60A.15, subdivision 1, paragraph (e), for fiscal year 1997.  
  2.34     (c) Notwithstanding paragraphs (a) and (b), the 
  2.35  commissioner shall proceed with the enrollment of single adults 
  2.36  and households without children in accordance with section 
  3.1   256.9354, subdivision 5, paragraph (a), even if the expenditures 
  3.2   do not remain within the limits of available revenues through 
  3.3   fiscal year 1997 to allow the departments of human services and 
  3.4   health to develop the plan required under paragraph (b). 
  3.5      Sec. 2.  Minnesota Statutes 1994, section 295.52, is 
  3.6   amended to read: 
  3.7      295.52 [TAXES IMPOSED.] 
  3.8      Subdivision 1.  [HOSPITAL TAX.] A tax is imposed on each 
  3.9   hospital equal to two 1.25 percent of its gross revenues. 
  3.10     Subd. 1a.  [SURGICAL CENTER TAX.] A tax is imposed on each 
  3.11  surgical center equal to two 1.25 percent of its gross revenues. 
  3.12     Subd. 1b.  [PHARMACY TAX.] A tax is imposed on each 
  3.13  pharmacy equal to two 1.25 percent of its gross revenues. 
  3.14     Subd. 2.  [PROVIDER TAX.] A tax is imposed on each health 
  3.15  care provider equal to two 1.25 percent of its gross revenues. 
  3.16     Subd. 3.  [WHOLESALE DRUG DISTRIBUTOR TAX.] A tax is 
  3.17  imposed on each wholesale drug distributor equal to two 1.25 
  3.18  percent of its gross revenues.  
  3.19     Subd. 4.  [USE TAX; PRESCRIPTION DRUGS.] A person that 
  3.20  receives prescription drugs for resale or use in Minnesota, 
  3.21  other than from a wholesale drug distributor that paid the tax 
  3.22  under subdivision 3, is subject to a tax equal to two 1.25 
  3.23  percent of the price paid.  Liability for the tax is incurred 
  3.24  when prescription drugs are received in Minnesota by the person. 
  3.25     Subd. 5.  [VOLUNTEER AMBULANCE SERVICES.] Volunteer 
  3.26  ambulance services are not subject to the tax under this 
  3.27  section.  For purposes of this requirement, "volunteer ambulance 
  3.28  service" means an ambulance service in which all of the 
  3.29  individuals whose primary responsibility is direct patient care 
  3.30  meet the definition of volunteer under section 144.8091, 
  3.31  subdivision 2.  The ambulance service may employ administrative 
  3.32  and support staff, and remain eligible for this exemption, if 
  3.33  the primary responsibility of these staff is not direct patient 
  3.34  care. 
  3.35     Sec. 3.  Minnesota Statutes 1994, section 295.54, 
  3.36  subdivision 2, is amended to read: 
  4.1      Subd. 2.  [PHARMACY CREDIT.] A resident pharmacy may claim 
  4.2   a quarterly credit against the total amount of tax the pharmacy 
  4.3   owes during that quarter under section 295.52, subdivision 1b, 
  4.4   as provided in this subdivision.  The credit shall equal two 
  4.5   1.25 percent of the amount paid by the pharmacy to a wholesale 
  4.6   drug distributor subject to tax under section 295.52, 
  4.7   subdivision 3, for legend drugs delivered by the pharmacy 
  4.8   outside of Minnesota. If the amount of the credit exceeds the 
  4.9   tax liability of the pharmacy under section 295.52, subdivision 
  4.10  1b, the commissioner shall provide the pharmacy with a refund 
  4.11  equal to the excess amount. 
  4.12     Sec. 4.  [EFFECTIVE DATE.] 
  4.13     Sections 1 to 3 are effective for gross revenues generated 
  4.14  by services performed and goods sold after June 30, 1996.