The Affordable Care Act required hospitals, health insurers, device makers and all pharmaceuticals companies to share the cost since they were supposed to get an avalanche of new, paying customers.
However, when a jaw-dropping $8 billion in taxes is due on Sept. 30, the insurers are getting help from an improbable source.
This year, the states and the federal governments are spending at least $700 million in order to pay the tax for their Medicaid health plans. All the insurers who operate in the approved states, will get money under the Medicaid managed care plans to cover the new expenses. Unfortunately, some states like Tennessee, Louisiana and Florida, that didn’t expand Medicaid as per law, turned down billions of federal dollars.
All insurer are getting some kind of help to pay the taxes. Private insurers are passing onto policyholders in the shape of higher premiums and Medicare health plans are getting the taxes done by the federal government via higher reimbursement.
As per many state Medicaid agencies, there is no choice other than paying for the taxes for the health plans they undertake to serve their poorest customer. This tax is an essential part of the health plan’ costs of doing business.
“This situation results in the federal government taxing itself and taxing state governments to fund the higher Medicaid managed care payments required to fund the ACA health insurer fee,” said a report by Medicaid Health Plans of America, a trade group.
Meanwhile, numerous Medicaid managed care companies experienced a hefty rise in both share prices and profits and they managed to get thousands of new customers due to the new health law.
As per a survey conducted by KHN on some big states, taxes will be costlier this year. The estimates are based on the number of plan enrolees in each state and how much premiums are paid. The operational states split the costs with the federal govt. where the latter bear an average of around 57%. While Texas estimates that the taxes will be of $220, Tennessee anticipates it will be something around $160.
According to the state Medicaid and health plan officials, Texas is believed to be the only state that is yet to agree to cover the taxes for its health plans. “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 are complaining that paying for the taxes making them unfit to spend the money towards offering more services or paying providers.
“I do not feel I am getting anything in return for this,” said Tennessee Medicaid Director Darin Gordon.
Meanwhile, most not-for-profit Medicaid health plans are exempt from all kind of taxation, which according to the trade group, gives the non-profits a competitive edge. “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 the non-profit and for-profit Medicaid plans, also not in favor of the taxation since it drains money from the Medicaid programs that could be used to improve the care services, he added.
However, the Center for Medicare and Medicaid Services declined to comment on how the federal and state governments are dealing with the tax part.
