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No fiscal implication to the State is anticipated.
SB 1229 would add a new chapter to the Insurance Code. Specifically, this new chapter would prohibit an insurer, or a vendor of that insurer, from using a credit card payment to settle a claim for services provided by a healthcare provider.
A payment could only be paid with a credit card if a patient pays directly with it or a person pays directly with it on behalf of a patient. Additionally, this legislation would not prohibit the use of a credit card for a flexible spending account (FSA) or a health savings account (HSA).
Currently, when a customer pays for a good or service with a credit or debit card, the merchant incurs a transaction fee charged by the company that processes the transaction. Current law prohibits a merchant from passing that transaction fee on to the customer. Likewise, when a health insurer pays a physician with a credit card, the physician incurs a transaction fee. Once again, the physician is not allowed to pass that transaction fee on to the health insurer.
SB 1229 would continue to allow an individual to pay a doctor's bill with a credit card but would prohibit a health insurer from paying a physician with a credit card so that the physician does not risk incurring a significant transaction fee.
We oppose SB 1229 on limited government and individual liberty grounds, because this legislation goes about solving a legitimate problem the wrong way. The simple fix would be to allow any merchant or physician to pass on the credit card transaction fee to their customers or health insurers in the form of a surcharge. This would allow people to then decide what form of payment to use based on what works best for them.
The current system of prohibiting a credit card surcharge simply drives up prices for everyone since the merchant accepting payment for a good or service must cover the transaction fee by raising prices for everyone, including cash and check customers, simply do not appear to discriminate against those who pay with a credit or debit card.
It should also be noted that the state is allowed to pass transaction fees on to citizens in the form of a surcharge. In fact, legislation under consideration this session would allow private universities to levy a credit card surcharge in order to have parity with state institutions of higher educations that already do the same. Why should government entities be allowed to levy a credit card surcharge but the private sector be prohibited from having that same ability?
Because this legislation attempts to fix the problem for physicians through additional regulation rather than eliminating the credit card surcharge ban for everyone, we oppose SB 1229.