House approves bill to eliminate hospital assessment if tobacco settlement funds flow; sponsors say CHIP preserved

SALT LAKE CITY — The Utah House approved House Bill 284 on Feb. 16 to eliminate a hospital assessment—described on the floor as a "sick tax" passed on to patients—if tobacco settlement funds become available to replace that revenue in funding the Children's Health Insurance Program (CHIP).

Representative Dayton, the bill sponsor, said HB284 does not dismantle CHIP. ‘‘This bill does not address the CHIP program. The CHIP program will be in place, and it will be funded with tobacco settlement money, gifts, interest, and a hospital tax,’’ he told the House, adding the bill would remove the hospital assessment only ‘‘if and when’’ tobacco settlement money arrives.

Opponents warned that removing the assessment could reduce the program’s revenue safety net if tobacco funds are delayed or smaller than anticipated. Representative Tanner said removing the assessment ‘‘is a wrong move’’ and argued hospitals could simply absorb costs or not reduce charges for patients, meaning consumers may not see lower bills while a source of dedicated funding disappears.

Sponsor Dayton responded repeatedly that the statute already guarantees CHIP funding from multiple sources and that if tobacco payments become available the assessment would be eliminated only when the tobacco funds are in place. "All this bill does is eliminate the assessment to the hospitals, which, of necessity, has to be passed on to the sick patients," Dayton said.

The House adopted a motion to cut off debate and proceeded to a vote. The clerk announced the result: 49 yes, 24 no. The bill passed and will be referred to the Senate.

Next steps: HB284 moves to the Senate. The floor exchange clarified the bill’s conditional nature (the hospital assessment sunsets only when tobacco settlement monies are available) and included concerns from members about potential impacts on hospital pricing behavior and program stability.