ObamaCare Slaps States With $15 Billion In New Costs

Thirty-six states that rely on private managed care programs to provide medical services to all or some of their Medicaid recipients are facing an added ObamaCare tax.

According to a report by Milliman consulting actuaries, states that contract with Medicaid managed care plans face up to $15 billion in added costs over 10 years for their share of the law’s tax on private health insurance.

States will pay even if they strongly oppose ObamaCare and are refusing to establish health insurance exchanges or expand Medicaid.

The health law imposes an annual tax on private health insurance plans – a tax designed to recoup what some call their “windfall” from the millions of new customers they could gain because of the law. The tax on health insurers was expected to raise a total of $8 billion in 2014 and as much as $150 billion over the next 10 years. It is one of 20 designed to fund ObamaCare’s expanded coverage.

Most Medicaid managed care organizations (MCOs) are considered private plans and therefore are subject to the new tax.  But this punishes states that are trying improve their Medicaid programs: They are working to make Medicaid more efficient and save money by contracting with private managed care plans to provide medical care to recipients. States that stay with the antiquated fee-for-service Medicaid program escape the levy.

Insurers have rightly argued that this tax will be passed along in the form of higher premiums. Milliman calculates the tax will increase Medicaid premiums by up to 2.5%. In recent years, states have allowed premium increases of only 1 or 2% annually, with some states actually cutting payments to plans, according to the report.

If Medicaid HMO plans are required to pay the new tax out of their profits, many would exit the market rather than operate at a loss. Further, the fee is considered an “excise tax” which is not deductible from corporate income taxes, amplifying its impact.

The Milliman report estimates the ObamaCare health insurer fee will increase Medicaid managed care premiums between $37 billion and $42 billion over ten years. Because both the states and the federal government share in funding Medicaid, the states’ collective share is expected to be between $13 and $15 billion.

Link:  http://www.forbes.com/sites/gracemarieturner/2015/01/05/obamacare-slaps-states-with-15-billion-in-new-costs/

This ObamaCare thing just keeps getting better and better.