State and federal governments that contract with private insurers for Medicaid managed care will pay at least $700 million this year under an excise tax on health insurers included in the Patient Protection and Affordable Care Act, according to a Kaiser Health News report.
Three dozen states that contract with health insurers to administer Medicaid managed care coverage will pay those insurers extra to compensate for the tax, according to the report. The tax or health insurance provider fee applies to entities with aggregate net premiums of more than $25 million starting this year. Government entities, self-insured businesses and nonprofit organizations that receive at least 80 percent of their revenue from government programs are exempt from paying the fee, according to Internal Revenue Service regulations.
Kaiser surveyed seven large state Medicaid programs, which will split the cost of the tax with the federal government. Here's what they expect the new tax will cost them.
1. Texas — $220 million ($90 million from the state, $130 million from the federal government)
2. Tennessee — $160 million ($50 million state, $110 million federal)
3. Pennsylvania — $139 million ($64 million state, $75 million federal)
4. Florida — $100 million ($40 million state, $60 million federal)
5. Georgia — $90 million ($29 million state, $61 million federal)
6. California — $88 million ($40 million state, $48 million federal)
7. Louisiana — $27 million ($10 million state, $17 million federal)