Iowa House Approves Temporary HMO Premium Tax Hike

Move aims to draw millions in federal Medicaid matching funds

Mar. 20, 2026 at 8:35pm

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The Iowa House has passed a bill to temporarily raise the premium tax on private companies that offer HMOs to Iowans, as well as the three companies that manage Iowa's Medicaid program. The nine-month measure would generate $124 million in federal matching funds for the state to help cover a Medicaid deficit.

Why it matters

The tax hike is intended to help address a Medicaid funding shortfall in Iowa, but critics argue it could ultimately impact consumers through higher insurance premiums.

The details

The bill would raise the premium tax on HMOs and Medicaid managed care organizations for a nine-month period. Supporters say this is a responsible budgeting move, while opponents argue the increased costs will likely be passed on to consumers.

  • The Iowa House passed the bill on March 20, 2026.

The players

Shannon Lundgren

Republican state representative from Peosta, Iowa.

Austin Baeth

Democratic state representative from Des Moines, Iowa.

Wellmark

A major health insurance provider in Iowa.

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What they’re saying

“We must not let individuals continue to damage private property in San Francisco.”

— Robert Jenkins, San Francisco resident

What’s next

The bill now moves to the Iowa Senate for consideration.

The takeaway

This tax hike is a controversial move aimed at shoring up Medicaid funding, but critics warn it could lead to higher insurance costs for Iowans.