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Health Insurance & Affordable Care Act

States To Help Pay Obamacare Tax On Insurers

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-- Pennsylvania predicts the tax will cost $139 million, with the state paying $64 million and the federal government, $75 million.

-- Louisiana estimates the tax will cost $27 million, with the state paying $10 million and the federal government, $17 million.

Texas is believed to be the only state that has not yet agreed to cover the tax for its health plans, according to state Medicaid and health plan officials.  “The premium tax is just another way that the costs of the Affordable Care Act are pushed down to states and families,” said Stephanie Goodman, spokeswoman for the Texas Medicaid program.

Medicaid officials in other states complain that paying the tax reduces money they could have spent on covering more services or paying providers.

“I do not feel I am getting anything in return for this,” said Tennessee Medicaid Director Darin Gordon.

Officials won’t know exactly how much states owe until the Internal Revenue Service sends bills to insurers at the end of August, and the Medicaid plans submit those to states.

The health insurer tax is estimated to bring in at least $100 billion over the next decade from all insurers, government auditors estimate.

Most non-profit Medicaid health plans are exempt from the tax, which the trade group says gives the nonprofits a competitive edge vying for state contracts.  “We consider this tax so badly construed that it should be reconsidered because it makes no public policy sense,” said Jeff Myers, CEO of Medicaid Health Plans of America.

The trade group, which represents both nonprofit and for- profit Medicaid plans, also opposes the tax because it takes money from Medicaid programs that could be used to pay plans to improve care, he said.

The Centers for Medicare & Medicaid Services declined to comment on how states and the federal government are covering part of the tax.

Timothy Jost, a consumer advocate and law professor at Washington & Lee University in Virginia, said the lawmakers intended to cover the costs of the law by including as many groups paying in as possible. 

While it may be unusual for the federal government to essentially tax itself, Jost said the situation is no different from the federal government paying a contractor to provide a service, then having that contractor use some of those dollars to pay state sales tax or federal income tax.

“This tax should not have surprised anyone, and it should have been worked into contract prices,” he said.

Paul Van de Water, senior fellow with the left-leaning Center for Budget and Policy Priorities, said neither health plans nor states should be complaining about the taxes because both are benefiting from the law.

“States are benefitting from the Affordable Care Act because with more people getting insured, it is driving down their uncompensated care costs,” he said. He noted that is true even in states that did not expand Medicaid under the health law.

Wed, Aug 27 2014

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