The Medicaid Plans of America (MHPA) submitted a statement for the record to the Subcommittee on Oversight House Committee on Ways and Means about the significant impact the insurer fee in the Affordable Care Act has on states’ and their Medicaid programs. Under the Affordable Care Act, there is an estimated $8 billion annual fee on the health insurance industry starting in 2014 that is estimated to grow to $14.3 billion by 2018 and is indexed to the rate of premium growth thereafter. The fee will be allocated to qualifying health insurers based on their respective market share of premium revenue in the previous year. Regulations issued by the Centers for Medicare and Medicaid Services (CMS) require premiums for Medicaid managed care to be actuarially sound and that states obtain an actuarial certification from a qualified actuary. The MHPA commissioned a study by the actuarial firm Milliman to analyze the impact of the fee on Medicaid health plans and to quantify the resulting cost to states and the federal government. The Milliman report found that over ten years, the fee would cost the government $38.4 billion with the state portion equal to $13.6 billion and the federal share at $24.8 billion.

Link(s): Statement