Kansas tax plan will lead to an increase in health insurance premiums for those with HMO plans
A new tax plan could increase health insurance premiums in Kansas. The state’s Senate passed the $470 million tax plan over the weekend, which will create a $47 million tax increase on managed-care organizations. The tax increase represents a 3.31% rate increase on health insurance companies that offer HMO plans. The increased rate on insurers will likely translate into higher premiums for policyholders as these companies seek to recover losses and mitigate the financial blow of the tax plan.
78,000 HMO policyholders to be affected by the state’s “privilege fee”
According to Clark Shultz, director of governmental affairs at the Kansas Insurance Department, there are approximately 78,000 HMO policies that will be affected by the tax plan. The rate increase on insurers is being referred to as a “privilege fee” and is retroactive by one year. This means that rate increases for those with HMO plans will be somewhat higher than for 2016, growing by 6.62%. Premiums could increase by a more significant margin, as many of the state’s insurers are already proposing rate hikes.
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Insurers are looking to raise rates on the coverage they offer to consumers
The Kansas Insurance Department noted earlier this year that insurance rates could rise by as much as 37%. Insurers are looking to recover from losses they experienced over the past year, much of which is due to the high cost of medical care. Rate increase proposals must be approved by state regulators before they can take effect, and Shultz suggests that extreme rate increases are not likely to be approved by the Insurance Department. As such, health insurance policyholders may see a more modest increase in premiums.
Premium increases are becoming more common
Rate increases are becoming more common in many states. More people throughout the country have coverage and these people are beginning to use their coverage to address medical concerns. The growing cost of medical care is adding more financial pressure on insurers, who must raise rates in order to address this pressure and provide adequate services to their policyholders.