Health Exchanges: Funded by Taxation of Exchange Products

States to Tax Plans Sold on the Exchange


In accordance with the ACA, States that opted to build their own exchange rather than defer to the federal exchange will lose federal financial support by January 2015. Therefore, they must finance the exchange operations on their own without federal revenue.

To fund exchange operations, three states have chosen to pay for the exchange through the use of general state revenues. Five states have enacted measures to tax plans that are sold on the state health exchange to raise revenue to finance exchange costs, and other states enacted laws to allow state health exchanges to impose taxes on all insurers, insurance products, and use other unspecified measures to produce revenue necessary to finance the exchanges.
 
The following states fund their exchanges through taxes on products that are sold on the exchange:  California, Idaho, Massachusetts, Minnesota, and Oregon.