To leverage those dollars, the states started taxing hospitals and health plans a few years ago and using that money to fund their Medicaid programs and thus get more federal dollars. The Bush Administration was not pleased by this, grumbled, and put some caps on these provider taxes (these caps were fairly high at 6% so didn't have an impact). The Obama administration has no such concerns about expanding Medicaid (and may expand it to everyone who wants it).
Oregon recently passed House Bill 2116 that expanded the state's Medicaid program with a higher tax on hospitals (5.5%) and a new 1% tax on health insurance premiums. Note that it's not a tax on health insurance companies but the premiums. I will explain how that's significant.
The hospital tax will ultimately be neutral because hospitals the state will increase Medicaid reimbursement as part of the deal. There will also be less uninsured patients as more will have Medicaid. Generally, the hospital taxes can help the hospitals if done carefully. The additional federal money must be shared proportionately with the hospitals that paid the most taxes. Initial tax proposals were too high and would have wiped one hospital's margin and given it to another.
The tax on the health insurance premiums is where the logic started to break down.
Forgot about Self-Insured Employers: The tax was only for employers and individuals who purchased insurance as it just taxed health insurance premiums. Self-insured employers were not included and health care reform often forgets about self-insured groups. They are exempt from state legislation due to ERISA and often exempt from the reform discussion. For example, I don't know if employer insurance taxes being discussed would apply to self-insured groups nor if any mandates apply to self-insured groups. I don't know if anyone in Congress has thought about it.
Self-insured groups are often the largest employers so they have a fair amount of power. The omission of self-insured groups may be intentional. However, if government continues to focus on taxing insurance plans, employers will move to self-insured plans, and the tax base will shrink.
Why do employers care about a health insurance tax? Because they're paying it. This is the strangest loophole in the tax bill. House Bill 2116 was presented as a tax on the evil insurance companies but the tax is being paid by groups and individuals who purchase insurance. Insurance companies were the able to pass the tax on to customers. The news is just starting to realize this and is properly indignant.
Are the insurance companies being evil? In every industry there are discussions on passing new costs to customers whether it be fuel costs, taxes, or paying off the salary of the former CEO who was caught in compromising positions at the Bovine Artificial Insemination Convention. Insurance companies generally pass on administrative expenses as part of the costs of their insurance. I confess that I am surprised that others are surprised that customers would wind up paying these new taxes since the bill did not prohibit passing on the costs. However, I am too close to the issue to have any objectivity. Are insurance companies being evil or have I grown cold and heartless?
Overall, the true message is that while our health care system is as fragmented as the Balkans, our method of shifting health care costs is as tightly coordinated as a herd of wildebeests thundering across the African plains. If we don't carefully understand where costs will be shifted among the different entities that sign the check for health care, we won't change health care in the way that was intended.
No comments:
Post a Comment