St. James Hospital in Butte

HELENA – In a surprise move Tuesday, a legislative budget panel approved a temporary $13 million tax on Montana’s largest hospitals to help balance the 2018-19 state budget – and fund a preschool incentive program.

A House-Senate conference committee inserted the tax into an obscure budget bill Tuesday morning, and a hospital spokesman told MTN News that he expects the measure to pass.

“There’s a feeling that the hospitals, especially the larger hospitals in Montana can afford to make this contribution to the state, inasmuch as they benefited from (Medicaid) expansion,” said Bob Olsen, vice president of MHA, which represents hospitals in the state. “So, they are willing to be good corporate citizens and participate, since the state has a budget shortfall.”

The money appears already spoken for, as part of the state budget.

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The same conference committee on House Bill 639 also voted Tuesday for an amendment to designate the funds for the Stars to Quality program, which provides incentives to private preschool programs.

The six-member committee approved the amended bill and sent it to the House and Senate floors, for action later Tuesday.

The tax will be imposed on 14 Montana hospitals in June in each of the next three years, totaling about $13 million. The size of the fee is tied to the size of each facility.

The annual payments range from $835,300 for Billings Clinic, the largest hospital in the state, to $2,900 for Bozeman Health Big Sky Medical Center in Big Sky, an arm of Bozeman Deaconess Hospital.

Olsen said reaction from hospitals has been “mixed,” but that they did negotiate the nature of the fee, once they were informed that lawmakers intended to tax the hospitals.

The tax would expire after three years.

Olsen said lawmakers of both parties felt the hospitals have benefited from the state’s 2016 expansion of Medicaid, which has used federal and state funds to provide health coverage to an additional 70,000 low-income Montanans.

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