Tuesday, September 2, 2014

How Taxpayers are Funding Obamacare's 'Insurer' Taxes

If you've been reading this blog you know that the Patient Protection and Affordable Care Act ("Obamacare" or "ACA" in the below article) contains a set of provisions commonly called the "Three R's" program to provide taxpayer funds and additional premium to insurers who aren't as profitable as they'd like to be in the first three years of the exchanges.  A few of Obamacare's 20+ new taxes are levied on insurers.  Today, Kaiser Health News and the USA Today detail how states are stepping in to pay a significant portion of these taxes on behalf of insurers ahead of a September 30th payment deadline. Just think of it as a bonus bailout as we head into the fall season. The below is from Phil Galewitz
When Congress passed the Affordable Care Act, it required health insurers, hospitals, device makers and pharmaceutical companies to share in the cost because they would get a windfall of new, paying customers.

But with an $8 billion tax on insurers due Sept. 30 -- the first time the new tax is being collected -- the industry is getting help from an unlikely source: taxpayers. 
States and the federal government will spend at least $700 million this year to pay the tax for their Medicaid health plans. The three dozen states that use Medicaid managed care plans will give those insurers more money to cover the new expense.  Many of those states – such as Florida, Louisiana and Tennessee – did not expand Medicaid as the law allows, and in the process turned down billions in new federal dollars. 
Other insurers are getting some help paying the tax as well. Private insurers are passing the tax onto policyholders in the form of higher premiums. ...
Wait do you mean that insurers don't just pay all additional Obamacare taxes and fees from the bloated, yacht-buying profits of millionaire and billionaire CEOs?  Flabbergasting!  Okay, back to KHN:
Medicare health plans are getting the tax covered by the federal government via higher reimbursement. 
Hey that works out well, doesn't it?  The federal government can just step in and pay its own increased taxing schemes with your money.  Why didn't we think of this before?
State Medicaid agencies say they have little choice but to pay the tax for health plans they hire to insure their poorest residents. That’s because the tax is part of the health plans’ costs of doing business. Federal law requires states to pay the companies adequate rates. 
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.
That emphasis is mine.
Meanwhile, many Medicaid managed care companies have seen their share prices – and profits -- soar this year as they gained thousands of new customers through the health law in states the expanded Medicaid. Over half of the 66 million people on Medicaid are enrolled in a managed care plans. 
A KHN survey of some large state Medicaid programs found the tax will be costly this year. The estimates are based in part on number of Medicaid health plan enrollees in each state and how much they are paid in premiums. States split the cost of Medicaid with the federal government, with the federal government paying on average about 57 percent. 
  • Florida anticipates the tax will cost $100 million, with the state picking up $40 million and the federal government, $60 million. 
  • Texas estimates the tax at $220 million, with the state paying $90 million and federal government, $130 million. 
  • Tennessee anticipates it will owe $160 million, with the state paying $50 million and the federal government, $110 million. 
  • California has budgeted $88 million, with the state paying $40 million and the federal government, $48 million. 
  • Georgia estimates the tax on its plans at $90 million, with the state paying $29 million and the federal government, $61 million. 
  • 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. ...
“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. ...