States to help pay ACA tax on Medicaid health plans

September 01, 2014

Kaiser Health News reports that 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, including Florida, Louisiana and Tennessee, did not expand Medicaid as the law allows, and in the process turned down billions in new federal dollars. In addition, private insurers are passing the tax onto policyholders in the form of higher premiums. Medicare health plans are getting the tax covered by the federal government via higher reimbursement. State Medicaid agencies say they have little choice but to pay the tax for health plans because the tax is part of the insurers' costs of doing business and federal law requires states to pay the companies adequate rates.