State Medicaid programs are contending that the federal government is getting ready to rob Peter to pay Peter.
The Medicaid Health Plans of American (MHPA), Washington, says letting the government apply the “health insurer fee” provisions in Section 9010 and Section 10905 of the Patient Protection and Affordable Care Act of 2010 (PPACA) to companies that run Medicaid plans would, in effect, amount to taxing Medicaid plans to help pay for expansion of Medicaid plans.
Imposing the fee on Medicaid managed care plans could increase state Medicaid costs by about $14 billion over the 10-year period starting in 2014, MHPA officials say, citing an analysis prepared by analysts in the Brookfield, Wis., office of Milliman Inc.
Because of the way Medicaid funding works, the federal government would spend about $25 billion on Medicaid plans’ health insurance tax obligations.
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Medicaid health plans could end up paying a total of one-sixth of the health insurance fee tax revenue collected, MHPA officials say.
MHPA officials are estimating that keeping the PPACA health insurer fee rules as they are now could lead to an average increase in Medicaid managed care premiums of about 1.5% and an increase of up to 2.5% in some states.