KDSN RADIO News
Iowa’s governor says HMO tax a last resort fix to Medicaid deficit
Governor Kim Reynolds says a temporary tax hike on H-M-Os and the companies that manage Iowa’s Medicaid program is a last resort to dealing with red ink in the Medicaid budget.
The bill raising the premium tax from 0.095% to 3.5% for nine months has cleared the legislature. It will qualify Iowa for matching federal funds, and Reynolds will sign the bill into law soon. “The fact of the matter is it helps cover the Medicaid shortfall,” Reynolds said during a news conference at the Iowa Capitol today. “From COVID, we’ve been watching it all along. The bill has come due.”
Reynolds told reporters every state is seeing Medicaid costs rise, partly due to an increase in severe illnesses, “which is probably not unsurprising when you think about what individuals went through, and they had to face with all of the uncertainty that we had during COVID. We believe that will start to settle out.”
Reynolds said she offered other ideas for filling the Medicaid deficit, including an increase in the tobacco tax and a 15% tax on vaping products. “I didn’t get very far with that and so, you know, I had four or five different options as the governor of this state to deal with another kind of outcome from COVID to get us back on track,” Reyonlds said, “and this, right now, looks like probably the most feasible way what we can do that.”
Reynolds indicated the HMO tax will avoid other cost-cutting ideas, like reducing services and medications currently available to Iowa Medicaid patients. Iowa’s premium tax on HMOs will revert to 0.95% on October 1, the lowest in the country. The governor and her fellow Republicans say it will be up to Wellmark and the other private companies that sold HMO policies to Iowa if premiums increase. Democrats say businesses always pass along additional costs to consumers, and this is the wrong time to take a step that might rachet up health insurance costs.
