The Iowa House passed a bill that would raise taxes on HMO health insurance plans. The bill (HF 2739) would temporarily change the tax on HMOs from less than 1% to 3.5%. Republican officials say the state needs the money to help cover a Medicaid budget deficit.
House Speaker Pat Grassley, R-New Hartford, said when the Legislature previously lowered taxes for insurance companies, the cost of health insurance continued to rise.
“Now, we’re in a position where, when we’re doing a one-time increase to draw down those federal funds and make sure we’re funding Medicaid, we’re hearing the same thing,” Grassley said. “So, it looks like, to me, the policies that we pass here in the Legislature, they’re going to keep driving up the cost on Iowans regardless of the decisions we made.”
Rep. Austin Baeth, D-Des Moines, said it’s common sense that insurance companies will pass cost of the tax hike on to Iowans.
“Either Iowans will strain to pay for that premium with their already stretched budget, or they’ll no longer be able to afford insurance at all,” Baeth said. “It’s those people who I worry about the most — the uninsured that will result from this.”
The bill now goes to the Senate, where the majority leader hasn’t committed to holding a vote on the legislation.
