The House passed a bill that would impose a surtax on health insurance – a 200% increase to become the highest in the nation – on a 43-25 vote.
The bill’s sponsor, Representative Deborah Armstrong (D-Bernalillo), said the surtax wouldn’t be felt by ratepayers, since the new fee is equal to the amount of a federal charge under the Affordable Care Act that was later repealed. She also brought a floor amendment that would sunset the surtax if the federal government reinstated the old fee again (we’ve been pushing for this amendment since day one of the session).
Through this surtax, HB 122 would generate $77.2 million in FY22 and roughly $154 million each year thereafter. Percentages of these amounts would then be split between the state General Fund and a new fund called the Healthcare Affordability Fund designed to bring down premium costs, so that people who don’t have insurance through their employer have an option other than Medicaid.
When Representative T. Ryan Lane (R-San Juan) asked how this would work, Armstrong explained that the fund would help create a reinsurance product so that small businesses with up to 50 employees wouldn’t be hit with skyrocketing premiums if one beneficiary was diagnosed with cancer, needed a kidney transplant, or had another high-cost condition. She explained that these extraordinary conditions are what make it too expensive for small businesses to offer their employees health insurance. When reinsurance picks up these “outliers,” the full cost of that person and their condition isn’t spread across the group. In this way, she said, the surtax would not only not be passed along, the bill would actually result in lower premiums, since the pool would increase as more and more people can afford to be insured.
But Lane brought up a good point: where does the bill say this? This program might be a good idea, but the bill leaves it up to state agencies to write rules that actually make this a reality – or not. HB 122 only adds a charge and says what fund the money is dumped into. From there, Lane argued, no one has any guarantee that these funds will be directed toward healthcare or health insurance programs, especially the 50% of the tax that goes straight into the General Fund (an amount that increases to a whopping 70% starting in July 2024!). When you put it like that, this bill looks like just another “revenue enhancement” – a tax increase, period – and one that could drive up health care premiums for businesses across the state.
Representative Rebecca Dow (R-Grant, Hidalgo and Sierra) brought a floor amendment of her own, which would have exempted small businesses from this increase. She explained that in the last year, these small businesses have seen the Unemployment Insurance Fund depleted, they have no certainty that they can even remain open, and the Legislature is now contemplating additional burdens for them, like sick leave and additional charges for their health insurance premiums. “They have suffered enough,” she said. Armstrong, however, said the tax needed to be broad-based and apply to everyone, or we would be disqualified from a federal match. Dow’s amendment was tabled 39-26, with Representatives Willie Madrid (D-Doña Ana and Otero) and Candie Sweetser (D-Grant, Hidalgo and Luna) crossing over to vote with Republicans.
Ultimately, the bill passed the House 43-25 on a party line vote. The bill now heads to the Senate for further debate.