Under the health care overhaul, the federal government will begin taxing itself and the states beginning in 2014... And that’s giving state Medicaid directors heartburn.
The law calls for a new tax on health insurers’ premium revenue — intended to help pay for expansion of coverage to 32 million uninsured Americans. But the tax will be paid by all insurers, including those that contract with states to provide coverage to recipients of Medicaid, the state-federal health insurance program for the poor. Under federal law, that fee must be paid by the Medicaid program, meaning that state and federal governments must pick up the tab.
A report released today by the actuarial firm Milliman Inc. said the tax will cost the Medicaid program between $36.5 billion and $41.9 billion over 10 years. At least $13 billion will be borne by states, and at least $23.5 billion by the federal government, based on the state-federal Medicaid matching formula, according to the report paid for by the Medicaid Health Plans of America, which represents private health plans that cover people on Medicaid. According to the America’s Health Insurance plans, the tax overall would generate at least $73 billion from 2014-2019.
“This is not an issue on most people’s radar screens, but this is going to be a big problem,” said Matt Salo, executive director of the National Association of Medicaid Directors. “This policy never really made sense … I get the point of an insurance tax, but when you are just passing on those costs to Medicaid, that makes no sense.”
With delightful surprises like this built into the Democrats' destructive health care bill, it's no wonder that Obama's advisers are predicting the death of America's health insurance companies. Which should do wonders for unemployment.