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Proposed HMO tax is removed following filibuster

April 24, 2019 – Early this morning, following many hours of debate, the Missouri Senate approved substitute language for SB 29 WITHOUT the proposed HMO tax. The bill is sponsored by Sen. Dan Hegeman, Chairman of the Appropriations Committee.

Sen. Hegeman, a Republican, also serves in one of the top leadership posts in the Republican-controlled Senate as Chairman of the Senate Majority Caucus. In an effort to increase money for Medicaid, Sen. Hegeman added an amendment to his bill in committee that would have established a new tax on HMO’s. Associated Industries of Missouri and the St. Louis Area Business Health Coalition were the only business organizations opposing the HMO tax and we are pleased it was removed from the bill.

The proposed tax of $1.80 per covered person per month, $21.60 per covered person per year would have been paid by employers and/or employees using an HMO. For an employer with 200 employees and dependents covered under their HMO plan, the tax would be $4,320 per year! The taxpayers paying the tax would receive no benefit from it.

While Associated Industries of Missouri and the St Louis Area Business Health Coalition led the charge against this ill-conceived tax, several courageous senators stood up for their constituents against this bad idea.

While much of the real discussion took place off the Senate floor, there was an attempt to add a work requirement to the MO Healthnet program for able-bodied recipients between certain ages. Sen. Eigel, who had previously expressed opposition to the HMO tax, indicated on the floor if the work requirement were added, he may be more open to the tax. But Senator Bob Onder asked early in the debate if the HMO tax was included and received confirmation it was initially included. The bill was later filibustered by Democrats opposed to the work requirements. One amendment would have expanded the MO Healthnet program.

AIM thanks all the Republican and Democrat senators that worked to remove the HMO tax and pass the underlying bill that reauthorizes the Federal Reimbursement Allowance programs for many healthcare providers. The re-authorization period was reduced from two years to one, meaning the tax could be considered again next year.

UPDATE: I am also pleased to report the HMO tax was not added to HB 1053, a similar bill sponsored by House Budget Chairman Cody Smith when that bill was passed out of the House Budget Committee Thursday morning. AIM thanks Chairman Smith and the House Budget Committee for moving the bill forward clean. The only difference between the House and Senate versions is the length of time the FRA programs are extended. The Senate version is one year and the House version is two years.

Senator Onder previously sat down with Ray McCarty to discuss the bill in this video.



Senator Bob Onder speaking against HMO tax in SB 29

AIM President/CEO Ray McCarty said, “AIM strongly opposed this tax and we are very happy the Senate did the right thing and refused to balance the Medicaid budget on the backs of employees and employers trying to maintain healthcare coverage for their employees. We support the underlying bill and we thank all the senators that helped stop this tax: Senators Onder, Eigel, Hoskins, O’Laughlin and Burlison.”

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