Iowa among states making early Medicaid choices
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Iowa is among the first states reshaping its Medicaid budget ahead of nearly $1 trillion in federal Medicaid cuts, with Gov. Kim Reynolds signing a bill last week to raise taxes on insurers.
Why it matters: The move signals potential ripple effects for coverage, costs and state budgets nationwide.
Catch up quick: The changes stem from a GOP-backed federal overhaul aimed at slowing Medicaid spending growth over the next decade.
- They build on the end of pandemic-era protections that had boosted enrollment and federal funding.
- Together, they shift more costs to states.
Stunning stat: Iowa expects a nearly $91 million budget shortfall this fiscal year if no action is taken and nearly $168 million in the upcoming fiscal year.
State of play: Iowa's law retroactively raises premium taxes on HMOs — a type of Medicaid plan offered by private companies — from 0.925% to 3.5% between Jan. 1 and Sept. 30, 2026.
- It'll drop to 0.95% in October.
Zoom in: The state will also use $89 million from its general fund to help address the Medicaid shortfalls, the Iowa Capital Dispatch reports.
What they're saying: Critics warn the tax could raise premiums for Iowans, while Republicans say it's temporary and needed to draw down federal matching dollars, Iowa Public Radio reports.
Zoom out: "Everyone is pissed and everyone is stressed," said Colorado state Rep. Lisa Feret, a Democrat and the lead sponsor of a proposal to tax large employers who have part-time employees enrolled in Medicaid as her state faces a $1.5 billion shortfall.
The bottom line: "This is the start of lots of tough choices around Medicaid policy going forward," said Robin Rudowitz, director of KFF's program on Medicaid and the uninsured.