Tax in Medicaid Managed Care Plans could force states to pay
Texas Insider Report: WASHINGTON D.C. Supporters and opponents of the Obamacare Health Law have begun lobbying Congress to scale back a tax in the Presidents program which could end up costing participating states billions of dollars.
As states begin to realize they will be on the hook for a portion of the
$8 billion Health Insurance Excise Tax (HIT) imposed by Obamacare on insurers it looks like an already costly item has become an even bigger hit.
The Affordable Care Act includes a new excise tax on insurance plans and the tax applies to the privately managed Medicaid programs many states use. Taxing Medicaid managed care plans could force state governments to pay the tax.
A report from the Milliman consulting firm estimated that the tax would cost state governments between $13 billion and $15 billion over the next decade.
Levied against insurance companies selling major medical health insurance the tax also applies to private Medicaid Managed Care Plans meaning states Medicaid costs will rise when those taxes get passed on in the form of increased premiums which could cost the states nearly $15 billion.
The insurance tax is structured as a flat fee it has to raise a certain amount each year so carving out Medicaid managed care plans would raise the tax burden for other insurance plans.
Insurance companies have lobbied for years to repeal the insurance tax altogether saying it will raise premiums across the board. The fee was included to
help pay for the cost of expanding insurance coverage.
The Republican Governors Association (RGA) raised the issue in a recent letter to congressional leaders saying the tax merits your urgent attention. But RGA Chairman Bobby Jindal (R-La.) and Vice Chairman Scott Walker (R-Wis.) opened the door to a narrower option in their letter to lawmakers asking only for Congress to exempt Medicaid and the Childrens Health Insurance Plan from the tax.
As Congress considers deficit reduction and tax reform we urge you to amend (the Affordable Care Act) to exempt all Medicaid and CHIP premium revenue from this fee they wrote.
Some of the laws supporters are also on board. The National Urban League is trying to build support for an exemption among other groups that support the health laws Medicaid expansion.
States that realize theyll bear new taxes on their Medicaid plans might be less inclined to expand the program the Urban League said.
We recognize that revenue mechanisms including fees are critical to achieve the savings that the ACA aims to accomplish the group wrote in a letter to the National Council of La Raza.
However due to the possibility that the fee may restrict the ability of states to expand their Medicaid programs through insurers that provide Medicaid and CHIP coverage we believe that an exemption for these plans should be considered.
Nevertheless Democrats have shown an increasing willingness to modify the healthcare law now that its basic survival has been assured.
A non-binding measure to repeal the laws tax on medical devices won overwhelming bipartisan support in the Senate last month and the White House has agreed to cut funding for certain programs as part of various spending and deficit-reduction bills.
A narrower exemption could also be a hard sell for large insurance carriers.
