Iowa’s insurance industry is pushing back against a proposed tax increase on HMOs that’s designed to cover a deficit in Iowa’s Medicaid program. Iowa currently charges a tax of just under one percent on each health insurance premium. The bill would raise the tax to three-and-a-half percent and the new tax would be into effect retroactively, on January 1st. Matt McKinney, a lobbyist for the Federation of Iowa Insurers, says it’s a 238% tax hike.
Brandon Geib, a lobbyist for Wellmark Blue Cross Blue Shield, says Wellmark expected to pay 11.5 Million dollars in taxes to the state for the 442,000 members in its HMO.
Geib says taxes are passed along to customers.
State officials say the proposed tax increase is temporarily allowed under the One Big Beautiful Bill President Trump signed last July and the tax hike would be repealed this fall. The state faces a March 31st deadline to enact the tax hike, and qualify for tens of millions in additional federal funding. Two Republican senators who’ve voted to advance the bill out of a subcommittee say they hope to figure out a way to soften the impact of the tax hike.
