The New York legislature voted down Gov. Andrew Cuomo’s proposal to tax health insurance policies to fund the state’s Obamacare exchange, calling the fees system used by the Obama administration and other states counterintuitive.
The shrinking number of state-run Obamacare exchanges are facing a new problem this year — how to fund their ongoing operations now that start-up grants from the federal government are running out.
In New York, like many other states, Cuomo proposed a tax on health insurance premiums to fund the state-run exchange’s operations. That tactic comes with its own concerns: some states, such as Hawaii, have smaller-than-expected enrollment and the per-policy fees aren’t bringing in enough money.
Rhode Island is considering adopting a tax itself, but due to small enrollment in the tiny state, fees per Obamacare enrollee would likely climb higher than $30 every month, according to Modern Healthcare. Even California, which boasted the highest enrollment of any state in 2014 (but has recently been dethroned by Florida), has had to raise its monthly premium tax.
But according to the New York Post, members of New York’s state legislature refused the extra tax on premiums because the plan would drive up the cost of health insurance for Obamacare customers, defeating the purpose of the exchange and its often-subsidized coverage.