Affordability 3/22

Appropriation Subcommittees continue to meet and hear presentations.  No bills will be considered until budget targets are released.

ACTION:  Continue to monitor.  Appropriation bills are not subject to funnel deadlines.  Subcommittee appropriation bills will not be introduced until after funding targets have been set for each Subcommittee.

Full Appropriation Committees

HOUSE:  HF 2739 passed the House on March 16 and relates to taxes on Health Maintenance Organizations (HMOs), transfers from the Taxpayer Relief Fund (TPRF), and a supplemental appropriation for Medical Assistance.  Division I of the Bill is estimated to decrease General Fund revenues by $6.6 million in FY 2026, $13.2 million in FY 2027, and $13.8 million in FY 2028 due to HMOs being retroactively exempt from the insurance premium tax.  Total revenue available to Medicaid is estimated to increase by approximately $171.7 million in FY 2027

and $16.4 million in FY 2028, including increased payments to the MCOs. The increase in MCO payments is estimated to be approximately $178.8 million in FY 2027 and $2.4 million in FY 2028, of which the State portion is $54.5 million in FY 2027 and $746,000 in FY 2028.  Division II of the Bill does the following:  transfers $296.2 million from the TPRF to the General Fund; adds the transfer from the TPRF to the General Fund under Iowa Code section 8.57E(2)(b), which will be made during the upcoming budget year to the expenditure limitation calculation for the same year; provides an FY 2026 supplemental General Fund appropriation of $70.3 million to the Department of Health and Human Services (HHS) for Medical Assistance.

ACTION:  Oppose. Insurance companies and businesses oppose this bill as it creates a tax on HMOs and essentially deposits it in a separate fund to be used to help fund HHS.  Additional funds are a plus for the HHS Medicaid Program.  However, it also transfers funds from the TPRF to HHS (see discussion of use of other funds in the over budget discussion in the 3-13-2026 Spotlight below.  This is another example of covering General Fund (GF) expenses with a tax and transfer of reserve funds to disguise the fact that the GF revenues are not sufficient to fully fund state expenditures. 

SENATE:  SF 2388 establishes continuing appropriations in fiscal years for which the General Assembly does not pass an annual budget.

ACTION:  Oppose.  This is what the federal government does frequently. Rather than debating, drafting, and making appropriations, Congress passes the buck by just re-authorizing the previous fiscal year appropriations.  In the case of Congress, the vote margins have been so slim that this is usually because of political differences.  There should be no reason for this in Iowa.  It basically says the Iowa General Assembly is unable to complete their work as required by the July 1 beginning of a fiscal year.

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