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HMO Tax back from the dead!

May 1, 2019 – It is often repeated in the halls of the Capitol and always proven true: nothing is ever really dead in the Missouri Senate until the legislature adjourns.

That was proven again today as the Missouri Senate revived an effort that would place a tax on HMO health care plans, paid for by employers and employees using such plans, to pull down more federal Medicaid dollars for Missouri Medicaid Managed Care Organizations. The language was added in a substitute for a bill that would provide a state “deal closing fund” through the Missouri Works program, HB 255, handled in the Senate by Senator Mike Cierpiot. The underlying bill (without the HMO tax) is sponsored by Rep. Travis Fitzwater.

As Missouri Medicaid Managed Care Organizations, the tax would benefit Home State Health (operated by the Centene Corporation), Missouri Care (A Wellcare company) and United Healthcare*. While these companies would pay the tax, they would receive additional federal Medicaid money that far exceeds their tax liability. But private employers and employees paying the tax would see no benefit at all. The federal government has said the tax may not be imposed on the state medicaid managed care organizations without also applying the tax to private health managed care organizations such as HMO’s.

Associated Industries of Missouri (AIM), along with the St. Louis Area Business Health Coalition and the National Federation of Independent Business (NFIB), protested taxing workers and employers in Missouri to benefit medicaid managed care organizations. The groups were successful in removing the tax from an otherwise good bill to extend the federal reimbursement allowance programs used by hospitals and others to tax themselves to draw down more federal Medicaid funding. See article on that effort here.

“The difference between the HMO tax and the other FRA taxes is clear,” said Ray McCarty, president/CEO of Associated Industries of Missouri.”The FRA programs allow entities to tax themselves and benefit from federal matching funds, similar to the benefit that would be enjoyed by Medicaid Managed Care Organizations from the HMO tax. But this HMO tax extends to employers trying to provide healthcare for their employees, either as a direct tax or through rates charged for HMO plans. This is simply not right and AIM will continue to fight against this inappropriate tax on employers,” he said.

McCarty reiterated support for the FRA program but opposition to the HMO tax in testimony before the House Budget Committee Wednesday evening on SB 29.

Senator Bob Onder sponsored an amendment to remove the HMO tax from the bill. That amendment was defeated by a vote of 24-8. Those voting in favor were in favor of removing the HMO tax and those voting against were in favor of enacting this new tax on employers. Here is how they voted:

Sen. Bob Onder

YEAS (in favor of removing the tax from the bill) — Senators Burlison, Eigel, Emery, Hoskins, Koenig, O’Laughlin, Onder and Wallingford.

NAYS (in favor of imposing the HMO tax) — Senators Arthur, Bernskoetter, Brown, Cierpiot, Crawford, Cunningham, Curls, Hegeman, Holsman, Hough, Libla, May, Nasheed, Riddle, Rizzo, Romine, Rowden, Sater, Schatz, Schupp, Sifton, White, Wieland and Williams.

Absent (not voting)— Senators Luetkemeyer and Walsh.

While the HMO tax is still included in the bill, the bill contains many, many provisions and has NOT yet passed the Missouri Senate. We ask all of you who are concerned about the Senate enacting this new tax to contact your senators and ask them to remove this onerous tax on Missouri employers and employees.

*NOTE – The listed Missouri Medicaid Managed Care Organizations collectively employ 19 lobbyists, according to Missouri Ethics Commission records.

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