States will have to pay Medicaid managed-care plans higher rates to cover the cost of the Obamacare health insurance tax, the CMS said last week.
The tax is expected to raise nearly $100 billion over 10 years from all insurers to help fund coverage expansion under the Patient Protection and Affordable Care Act. Insurers have argued that states should cover the cost of the tax, while some state officials have complained about the financial burden. But other observers say the new federal dollars flowing to states that accept the ACA's Medicaid expansion more than offset the cost of the tax.
The federal government itself will pay the majority of the tax since it pays over half of the cost of state Medicaid programs.
Some states had held off on building the tax into the rates they pay Medicaid plans, saying that without federal guidance they were unsure if they had to. The tax is expected to raise $8 billion in 2014 alone. Most not-for-profit Medicaid plans are exempt from the tax.