Governor Tom Vilsack says he’ll try again next year to raise the state’s cigarette tax by 80 cents a pack. The governor wants the money to help small businesses “buy down” the cost of health insurance. He says the state will offer health insurance providers cover their own risk, by offering reinsurance for them.
To use an example, he says Wellmark might contract with the state and its reinsurance fund, agreeing it’ll offer a policy to small business owners and if the state provides reinsurance for certain illnesses or costs, it’ll give a better price to those business clients. He says if the state agrees to cover catastrophic illnesses or specific diseases that drive up the costs of insurance, providers will offer lower rates for small businesses. It lowers or stabilizes the cost of providing that coverage, the governor says, and he says looking at the example provided by New York and Arizona, more businesses will be able to afford to provide their workers healthcare coverage.
Governor Vilsack says the state should set aside 40 million dollars to finance the reinsurance system. That’s where the increase in the cigarette tax comes in.
The governor says it’ll do two things — eliminates or cuts the number of people who are uninsured, and it should cut the Medicaid budget. He says people working at low-paying jobs who can’t get health coverage use state programs for healthcare and if they can get insurance through their employers, they’ll get off Medicaid and save the state money.
The governor says his reinsurance program would cover businesses with 25 employees or less, as well as Iowa’s public schools. He will present his proposal to the legislature in January.