Connecticut Hospitals Raise Concerns Over Proposed Hospital Tax Increase

Hospitals warn that the new tax proposal threatens healthcare access and affordability in the state.

Published on Feb. 4, 2026

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Connecticut's hospital industry is voicing serious concerns over Governor Ned Lamont's proposed FY 2027 budget, which includes a $100 million increase in the provider tax paid by hospitals. The Connecticut Hospital Association (CHA) argues that this tax hike, combined with chronic Medicaid underpayment, will force hospitals to make difficult choices that threaten patient care and weaken the state's healthcare safety net.

Why it matters

The proposed hospital tax increase comes at a time when Connecticut's healthcare system is already under significant financial strain. Hospitals in the state are facing nearly $1.5 billion in annual losses due to Medicaid underpayment, and the additional tax burden could exacerbate these challenges, leading to cuts in programs, longer wait times for appointments, and fewer resources for vulnerable patients.

The details

Governor Lamont's budget proposal would add $100 million in new state taxes on hospitals in its first year, raising the total amount hospitals pay in taxes to $920 million in FY 2027. Hospital executives have responded with concern, noting that Medicaid currently pays only about 63 cents for every dollar it costs to care for Medicaid patients, and the higher tax will force them to make difficult decisions that impact patient care.

  • Governor Lamont is set to deliver his State of the State address on February 4, 2026.
  • The proposed $100 million hospital tax increase would take effect in FY 2027.

The players

Connecticut Hospital Association (CHA)

The trade organization representing hospitals in Connecticut, which has expressed serious concern over the proposed hospital tax increase.

Jennifer Jackson

CEO of the Connecticut Hospital Association.

Patrick Charmel

President and CEO of Griffin Health, an independent community hospital in Connecticut.

Jeffrey Flaks

President and CEO of Hartford HealthCare, a major healthcare system in Connecticut.

Christopher O'Connor

CEO of Yale New Haven Health, the state's largest provider of Medicaid services.

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What they’re saying

“The care Connecticut depends on is at risk under this proposed budget. This tax proposal continues to ask hospitals to shoulder higher taxes while making little real investment in patient care at a time when financial burdens are already enormous. The result will be fewer resources at the bedside, higher healthcare costs imposed on consumers, and more strained workforce.”

— Jennifer Jackson, CEO of the Connecticut Hospital Association (westfaironline.com)

“The reality on the ground for independent community hospitals like ours is stark: Medicaid today pays only about sixty‑three cents for every dollar it costs us to care for our Medicaid patients, and yet we are being asked to absorb a higher tax on top of that chronic underpayment. This is not a theoretical budget issue – at my hospital it means real cuts to programs, longer waits for appointments, and fewer healthcare resources for some of the most vulnerable people in our community.”

— Patrick Charmel, President and CEO, Griffin Health (westfaironline.com)

“Connecticut is home to the highest quality healthcare in the nation, and that is something we should all be proud of. Maintaining that standard of excellence requires investment as well as honest recognition of the challenges facing healthcare. Investing in healthcare should be a priority as it protects the workforce, ensures a focus on innovation and is an overall benefit to the state, ensuring this is the place where people want to live, work, and retire.”

— Jeffrey Flaks, President and CEO, Hartford HealthCare (westfaironline.com)

“The state's chronic under reimbursement of Medicaid services means we are paid the least when we care for the patients that need us the most. As our state's largest provider of Medicaid and operator of essential safety net hospitals, our Health System's costs exceeded our reimbursement by a combined total of $450 million caring for 663,509 Medicaid beneficiaries in 2024 alone.”

— Christopher O'Connor, CEO, Yale New Haven Health (westfaironline.com)

What’s next

The Connecticut legislature will need to review and approve Governor Lamont's proposed budget, including the hospital tax increase, during the upcoming legislative session.

The takeaway

The proposed hospital tax hike comes at a time when Connecticut's healthcare system is already under significant financial strain, with hospitals facing chronic Medicaid underpayment and other financial challenges. If enacted, the tax increase could force hospitals to make difficult choices that threaten patient care and access, underscoring the need for a more comprehensive approach to supporting the state's healthcare infrastructure.