Insurer fees will cost Massachusetts $162M over the next decade

Medicaid on paper and a stethoscope

Massachusetts will likely spend $162 million over the next 10 years in insurer fees used to fund Medicaid expansion, according to a new report, with taxpayers responsible for twice as much.

Released by the Pioneer Institute, a free-market think tank in Boston, the report found that MassHealth, which operates the state’s Medicaid program, paid $36 million to six managed care organization in 2015 to cover Health Insurer Provider Fees (HIPF) mandated by the Affordable Care Act to fund Medicaid expansion. Since half of that is reimbursed by the federal government, that net cost to Massachusetts was $18 million in 2015, which extrapolates to $162 million over the next 10 years, after accounting for a one year suspension of those payments in 2017.

But, the analysts argue that because the fees are partially funded by the federal government, Massachusetts taxpayers are actually responsible for the full $324 million over the next decade. 

“The ACA insurer fee is taken from taxpayers’ wallets, and will mean fewer dollars for education, public safety and infrastructure, instead of being funded by the large insurers who profit from Medicaid expansion,” said Josh Archambault, a senior fellow at Pioneer said in a announcement. “This is another unintended consequence of the federal health reform law.”

Six states have filed a lawsuit against the Obama administration over the HIPF claiming that states should not be responsible for the fees, and previous reports have indicated the fee is hurting states by diverting funding from other programs.