Majority Party Raising Healthcare Costs

These are interesting times in the Iowa Senate. This week, Senate Republicans rushed to bring a bill to the floor for debate – breaking internal legislative rules to do so – just so they could narrowly pass it and send it to the governor’s desk as quickly as possible. What was so important that it couldn’t possibly wait, you ask? A tax increase that will raise Iowans’ healthcare costs.

HF 2739 (originally introduced in the Senate as SF 2464) increases taxes on Health Maintenance Organizations (HMOs) – including HMOs under the state’s Managed Care Organizations (MCOs) and private insurance firms. The bill sets a retroactive tax increase, beginning January 1, 2026, and running through September 30, 2026, and also a permanent increase beginning October 1, 2026, and running for all subsequent years. 

I know what you’re thinking. Why should you care about whether health insurance companies have to pay higher taxes? There are two main reasons you should care.

Who will really pay for this tax hike?

While the tax increase will be levied on insurance companies, Iowans will ultimately bear the cost. At a public hearing on the bill, a representative for Wellmark said the increase would be passed along to consumers, raising health insurance costs for Iowans on HMO plans by an additional $115 per person, or nearly $500 for a family of four.

The folks most affected by these spikes will be the Iowans who are already struggling with rising healthcare costs. We’re talking about people like Iowa farmers and small business owners whose health insurance premiums skyrocketed in January thanks to changes at the federal level. Times are tough enough as it is, now Republican lawmakers are cordially inviting folks to fork over even more.

Why is this happening?

During COVID, Iowa saw a massive influx of federal funds. The state’s Medicaid program, especially, benefited from these new federal dollars. We were experiencing high revenue growth at the time, which made some state lawmakers a little too comfortable. The majority party began slashing taxes, starting with corporations and the wealthy. 

Like I mentioned last week when we talked about the “plan” unraveling, state revenues continue to sink, rather than rebound. But Senate Republicans are spending like nothing has changed. Now we have these growing deficits – $1.3 billion for FY26, a projected $1.2 billion for FY27 – and a $90+ million Medicaid shortfall which will balloon even more next year.  

Republican lawmakers are using this tax hike – which, again, Iowans will pay for through higher health insurance costs – to drum up new revenue to fill the massive budget deficit hole that they created. Iowans will pay the price for the majority party’s budget mismanagement. 

Here’s the bottom line: Iowans don’t want this. Republican lawmakers are rushing this bill through the process, trampling over procedural rules they agreed to, in the hopes that you won’t notice and you won’t know who to blame when your healthcare costs go up again. 

Senate Democrats are laser-focused on affordability, and that means, unlike the majority party, we’ll continue to fight for policies that actually lower your costs, not raise them even higher.