MHPA Applauds Congressional Action to Fully Repeal Health Insurance Tax

HIT Repeal Will Dramatically Reduce Burden on States and Beneficiaries

Washington, DC (Dec. 17, 2019) — Medicaid Health Plans of America (MHPA) is thrilled that Congressional Leadership has included full repeal of the Health Insurance Provider Fee — more commonly known as the Health Insurance Tax (HIT) — in its year-end spending and extender package. This action, which mirrors the text of H.R.2447 and S.80, will save billions of dollars in fees that in previous years has placed undue burden on state budgets, Medicaid managed care organizations (MCOs) and taxpayers. Eliminating the tax allows states to reinvest the savings in direct health care services for low-income, disabled, and elderly Medicaid beneficiaries.

“Repeal of the Health Insurance Tax will be a win for Medicaid managed care plans, the states who administer them, and most importantly, the taxpayers and beneficiaries of the program,” said Craig A. Kennedy, CEO of Medicaid Health Plans of America. “MHPA is grateful that Congress acknowledges the HIT is a redundant tax on states and increases the cost of care for our most vulnerable citizens who rely on Medicaid for high-quality, cost-effective coverage. We thank Congressional leaders for including full repeal of the HIT in this year-end spending package.”

The fee is part of the Affordable Care Act and is charged in the form of an excise tax by the federal government to health insurers, which includes most Medicaid MCOs. Due to federal law, the states must include medical costs, administration, taxes, and fees in the rates they pay to Medicaid managed care plans. Once Congress votes to fully repeal the HIT ahead of the year-end deadline, Congress will avoid the need for states to cover the costs of the tax in their MCO payment rates in future years.

Congress has been working to strike a budget deal in order to fund the government before the current stopgap funding is set to expire this Friday. Congress previously delayed activating the fee in 2017 and again in 2019, both times with broad bipartisan support.

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Founded in 1995, the Medicaid Health Plans of America (MHPA) represents the interests of the Medicaid managed care industry through advocacy and research to support innovative policy solutions that enhance the delivery of comprehensive, cost-effective, and quality health care for Medicaid enrollees. MHPA works on behalf of its 94-member health plans, known as managed care organizations (MCOs), which serve approximately 23 million Medicaid enrollees in 37 states and the District of Columbia, or about one-third of all Medicaid beneficiaries in states with managed care delivery systems. MHPA’s members include both for-profit and non-profit, national and regional, as well as single-state health plans that compete in the Medicaid market.