Court Opinion

ID: 9763378
Source: CourtListenerOpinion
Date Created: 2023-08-29 02:43:37.977064+00
Date Added: 2024-06-11T07:29:42.052194
License: Public Domain

STUMBO, Justice,
dissenting.
Respectfully, and with some reluctance, I must dissent. I agree with the majority opinion’s excellent analysis as to the constitutionality of taxing those involved in health care as a class for the purpose of obtaining federal funding to support Kentucky Medicaid. It is the disparate treatment of the subclasses by House Bill 1 that I find unacceptable.
House Bill 1 (codified as KRS 142.201-142.259 and KRS 216.270-216.287) sets up three classes of health care providers which are taxed at different rates, and one of which is permitted to “pass on” to the recipient of the taxable item or service the tax imposed. Hospitals are taxed at a rate of 2⅛ percent of gross revenues. KRS 142.203. Health care providers other than hospitals (e.g., physicians, health maintenance organizations, nursing homes for the mentally retarded, and others) are taxed at the rate of 2 percent of the gross revenues. KRS 142.207. Pharmacies and others dispensing out-patient prescription drugs are taxed at the rate of 25 cents per prescription. KRS 142.211. Of this last class, only pharmacies are permitted to pass the tax on to insurers, health maintenance organizations, and non-profit hospital and health service corporations. KRS 142-211(l)(a).
Physicians can, and do, dispense out-patient prescriptions, yet they are forbidden to pass on the 25 cent tax that pharmacies are permitted to pass on. KRS 142.213(1). Additionally, pharmacies are permitted to pass on the same tax to a provider, as defined by KRS 142.207, already subject to taxation; that is, a health maintenance organization which in turn is forbidden to pass on the tax. The result is that a health maintenance organization pays both the 2 percent tax on its gross income and the 25 cent per prescription tax passed through it by the pharmacies. Thus, two members of the same subclass are treated differently. These differences compel me to conclude that these subclassifica-tions are unreasonable and arbitrary in that the members of the subclasses are not treated equally. Schoo v. Rose, Ky., 270 S.W.2d 940 (1954).
WINTERSHEIMER, J., joins in this dissent.