A tax on health insurers is helping pay for President Barack Obama's health care overhaul. But it's proving costly to state governments.
The burden on states could add up to $13 billion in less than a decade — thanks to the private sector's growing role in Medicaid.
Continue Reading Below
The Health Insurance Providers Fee was aimed at insurance companies. Insurers raised prices for individuals and small businesses to cover the new tax.
And they're raising their prices to state Medicaid programs, too.
The federal government issued guidance in October requiring states to build the tax into what they pay for-profit Medicaid health plans. The first year's tax was due to the IRS in September, and state governments are now settling up with insurance companies.