Two key statehouse Republicans are suggesting is may be necessary to raise a tax on some health insurance companies and use that extra money to reduce the deficit in the state’s Medicaid program.
Raising a tax on Iowa HMOs and the private companies that manage the state’s Medicaid program is temporarily available under the One Big Beautiful Bill President Trump signed last summer. “We have a Medicaid shortfall,” Reynolds said during a news conference Thursday. “I mean, that’s the main driver of this and that would help address that. It’s pretty significant and that would help address that. It’s pretty significant that the bill was going to come due after COVID and this is one of the ways, one of the options that we have and it doesn’t even take care of all of it.”
A lobbyist for Wellmark Blue Cross Blue Shield railed against the proposal earlier this week, suggesting it could be the single largest tax increase on a private Iowa company in legislative history. Reynolds told reporters Wellmark’s original calculation of a nearly $50 million tax hit was incorrect and state officials calculate Wellmark will pay about $25 million more if the premium tax is raised on Wellmark’s HMO. House Speaker Pat Grassley said Republicans aren’t generally interested in raising taxes, but they’re open to considering this temporary tax.
“Looking at the current shortfall with around $70 million…Our five years you’re looking at a roughly $600 million shortfall,” Grassley told reporters late Thursday afternoon. “I think this is an appropriate thing at least for us to discuss.”
Senator Tim Kraayenbrink, the Republican from Fort Dodge who chairs the Senate Appropriations Committee, said lawmakers are looking at ways that might lessen the blow to private insurers, but he notes there’s a March 31 federal deadline for passing a bill that would raise the premium tax and funnel the money to Iowa’s Medicaid program. “This is one of the things that I was taught as a kid that whenever you’re compromising, nobody’s usually happy at the end,” Kraayenbrink said during a subcommittee hearing on Tuesday. “That means you probably hit a good compromise.”
The proposed insurance premium tax would be retroactive to January 1 and end September 30.
