Insurance companies and other opponents of a temporary state tax increase on HMO premiums are urging House members to abandon the idea.
Governor Reynolds and Republican lawmakers say the tax increase will qualify Iowa for a matching amount of federal funds that will be used to cover higher costs in Iowa’s Medicaid program. Iowa Taxpayers Association President Nate Ristow said lawmakers would be able to cover the $90 million hole in the Iowa Medicaid budget if the entire state budget hadn’t increased more than 5% this year.
“The diversion from responsible budgeting has led us to a point where making up less than 1% of our overall budget in order to cover additional costs in Medicaid apparrently requires a tax increase on Iowans and Iowa businesses,” Ristow said this morning during a public hearing on the tax plan.
Scott Sundstrom, a lobbyist for Wellmark Blue Cross Blue Shield, said it’s a tax increase of just over $24 million for Wellmark, $115 premium increase for every Iowan covered by the company’s HMO plna.”As we all know health care is incredibly expensive. It it too expensive,” Sundstrom said. “It is a system with lots of problems and costs and this is going to make it worse.”
The tax is proposed for Wellmark, as well as the three private insurance companies that manage Iowa Medicaid claims. Matt Chapman of Waukee, an advocate for residents of mobile home parks, said many vulnerable Iowans depend on Medicaid, but those private Managed Care Organizations aren’t serving their needs. “I would have no issue with taxing the MCOs at 3.5% if we held them accountable for the rampant denial of services,” Chapman said.
Logan Shine, state director for the National Federation of Independent Businesses, said surveys of the group’s members show 98% those tha still offer health insurance as an employee benefit believe it’ll soon become unaffordable. “Obviously this legislation does not help that and adds to the growing concern,” Shine said.
The tax hike is scheduled for debate in the Iowa House tomorrow. The Republican who leads the House Appropriations Committee says Iowa taxpayers shouldn’t have to cover the shortfall in Iowa’s Medicaid program when insurance companies make profits running the program.
