Rep. Kiley Asks HHS to Block California’s New Healthcare Tax

Washington, D.C. – Rep. Kevin Kiley (I-CA) has sent a formal request, joined by other members of the California delegation, urging the Department of Health and Human Services and the Centers for Medicare and Medicaid Services to deny approval of California’s recently enacted Managed Care Organization (MCO) tax.

“Californians already face the highest cost of living in the country. Adding hundreds of dollars more to families’ healthcare premiums is unacceptable. Policymakers on both sides of the aisle, at both the state and federal level, need to be focused on making healthcare more affordable.”

California’s new MCO tax, amounting to $8.85 per enrollee, is estimated by the state’s nonpartisan Legislative Analyst to raise premiums by $100 per year for an individual and $400 per year for a family of four.

You can read the delegation letter attached.

Dear Secretary Kennedy and Administrator Oz,

As representatives concerned about the ballooning cost of health care, we respectfully

urge you both to deny federal approval of California’s Managed Care Organization (MCO) tax

proposal. This proposal would dramatically increase costs on commercial health plans to

preserve state revenue rather than make health care more affordable.

Californians are already shouldered with the highest cost of living in the United States.

This proposal will only make things worse, with families of four estimated to pay an additional

$400 a year in premiums due to the $8.85 per person tax. This burden is not just borne by

families, but by small businesses as well. This additional cost will incentivize them to remove

health care benefits from workers, increasing health care costs for everyone, dumping them in

less generous and more expensive Affordable Care Act plans, or even forcing them onto

Medicaid.

California’s legislature and governor must put forward a responsible solution that does

not punish people for receiving commercial health insurance. This stance is not partisan. Major

groups in the state, such as the California Medical Association, California Hospital Association,

California Primary Care Association, California Association of Health Plans, and the California

Chamber of Commerce are opposed as well. The Working Families Tax Cut (H.R.1) took an

important step toward ensuring that states use the MCO tax responsibly to support their Medicaid

programs. California should now reprioritize its budget and put forward a proposal that complies

with the uniformity standards while avoiding unnecessary increases in health care costs.

Sincerely