Health insurance premium tax bill advancing

Iowa House lawmakers are advancing legislation that would place a temporary tax increase on some health insurance companies in the state — matching a similar legislative proposal moving in the Senate.

The House bill, like its Senate counterpart, would temporarily increase the tax on health insurance premiums from 0.925 percent to 3 percent to help the state cover increasing Medicaid costs. Retroactive to the beginning of 2026, the increase would generate an additional $204 million in the 2026 calendar year and $5.4 million in 2027, a state official said during a legislative hearing on the House bill Wednesday.

Iowa-based health insurance companies have expressed their strong opposition to the proposal.

Wellmark Blue Cross Blue Shield has told lawmakers the bill would increase its tax burden by $24.1 million, and the Federation of Iowa Insurers warned those health insurance companies' increased costs "will find their way into future rates and future costs for Iowans."

House legislators on a three-member subcommittee panel said Wednesday the legislation is needed to address rising Medicaid costs and invited the insurance companies to offer alternative solutions to the issue.

Republican Iowa Reps. Shannon Lundgren of Peosta and Matt Windschitl of Missouri Valley signed off an advancing the bill, House Study Bill 762, making it eligible for consideration by the full House Ways and Means Committee on tax policy. The Senate passed its version, Senate Study Bill 3182, out of that chamber's Ways and Means Committee, also on Wednesday, with only Republicans voting in support. It's now eligible for floor debate.