March 20, 2010

THE COMING KINGDOM OF HAWAII:

Federal health takeover threatens Hawaii budget (John R. Graham, Mar 20, 2010, Honolulu Star-Bulletin)

Revenue from premium taxes on health insurance can be a measurable factor in states' budgets — about $6.5 billion in 2008, generated from just under half a trillion dollars of premiums for state-regulated health insurance.

These estimates result from the new study "Taxing Health Insurance: How Much do States Earn?" The study compares estimated premium-tax revenue from health insurers to state spending on Medicaid and SCHIP, the State Children's Health Insurance Program.

According to this measurement, Hawaii is in the second-riskiest position of all 50 states, after Nevada. "Taxing Health Insurance" estimates that Hawaii collected about $107 million in premium tax from health insurers in 2008. The state's own Medicaid and SCHIP funding added up to $505 million. So these tax revenues accounted for one-fifth of the state's spending on these huge government programs.

Premium tax revenue is about 13 times greater than necessary to fund a state's insurance department. A full 92 cents of every premium dollar flows straight into the general fund, so state residents should be aware of how their revenues could be reduced by what purports to be insurance reform.

Posted by Orrin Judd at March 20, 2010 8:14 AM
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