We are about to complete Week 10 of the 2026 Legislative session. It has been a busy and productive session, and this week we faced several challenges that require hard decisions and decisive leadership. In this edition of Freedom Watch the challenges of the increasing costs of Medicaid and the progress on property tax reform.
House File 2739: Medicaid Assurance through HMO Tax Increase
Currently, Iowa insurance companies pay less than 1% in provider tax to the state. For calendar year 2026, the tax rate on insurance companies is 0.925%. This is one of the lowest, if not the lowest, provider tax in the entire nation. Most states are somewhere between 2-4%.
Here is the hard decision that we believe must be made: This legislation proposes an increase in the tax for nine months, to 3.5%. This is estimated to generate more than $250 million in additional funding, all of which would go toward the ever-increasing costs of Medicaid.
This is a tax on the insurance companies, not on Iowans. If the insurance companies choose to pass that tax on to the insured, that would be their decision, but we do not believe it is warranted or necessary. It is worth noting that Wellmark had a net profit of more than $176 million in 2025, and this tax increase is a tiny fraction of that number. They could certainly absorb this temporary tax increase, particularly in light of the fact that they have traditionally enjoyed the lowest tax rate in the nation.
These large insurance companies say they will have to raise premiums to make up for this small, short-term tax increase. Interesting, given that they have continually raised prices on insurance policies while making massive profits. I wonder, if they choose to raise premiums for this short-term tax in the face of massive profits, if they will lower rates once the tax goes back down? Did Iowans see lower premium rates over the last four years while these insurance companies enjoyed the lowest tax rate in the nation? I think we all know the answers.
Why we must do this: The revenue from this short-term increase is critical as Iowa—like the rest of the country—struggles with the massive cost increases of Medicaid that states have little control of. Without these funds, the state faces projected Medicaid deficits of approximately $90 million for Fiscal Year 2026 and $167 million for Fiscal Year 2027.
This challenge is not unique to Iowa. The only thing that is unique to Iowa is how low our tax rate is, and in fact being responsible in this case actually put us at a disadvantage. Across the country, states are facing Medicaid fiscal pressure driven by the expiration of pandemic-era federal subsidies and the implementation of the One Big Beautiful Bill Act (OBBBA) which seeks to get some of the cost increases under control on the federal level but is adversely impacting some states who were acting responsibly.
This fact is critical and why we must do this temporary tax increase: it allows us to pull matching federal funds we would not otherwise receive. With new restrictions on states’ ability to change tax rates, many states are left with significant holes in state budgets. This is forcing many legislatures to consider benefit cuts or emergency tax hikes to maintain coverage. We are taking what we believe to be the best possible approach in a challenging situation with no great options.
Nobody likes to see their taxes go up. So, I get why the insurance companies are pushing back as hard as they can. As Republicans, we have cut taxes on Iowans over and over. However, when faced with a choice between protecting insurance company profits or continuing to provide health care for Iowans as we face massive cost increases in Medicaid, we are choosing to protect the health care of Iowans.
We are asking a multi-billion-dollar industry to contribute at a rate more in line with the rest of the country for just nine months. This is not a permanent tax hike; it is temporary to ensure our most vulnerable – our seniors in nursing homes and Iowans with disabilities – do not lose access to care. It is not a decision we wanted to make; it is a decision we had to make.
House Study Bill 596: Taxpayers Remain the Priority in House Republican Property Tax Proposal
This week, I am excited to report that Iowa House Republicans passed our property tax bill through the Ways and Means Committee.
I serve on the Ways and Means Committee, and we amended the bill to reflect the feedback we’ve gotten from Iowans, while also including some components from the Senate Republicans’ and the Governor’s property tax proposals.
This plan is not about protecting the status quo for taxing entities; it is about creating predictability and protecting the bank accounts of hardworking Iowans. For too long, the property tax system has put certainty for government budgets over the certainty of family budgets, and with this proposal, Republicans are flipping that script.
The major components of the updated bill include:
- Capping revenue growth at 2%, plus new construction, ensuring that cities and counties are still incentivized to grow. This component includes exceptions for schools and the debt levy.
- Delivering immediate relief to every homeowner by creating a 10% up to $25,000 exemption on residential property. By creating this exemption for every residential property, we are delivering immediate tax relief to every single homeowner in Iowa. This means every senior citizen on a fixed income, every young couple buying their starter home, and every middle-class family working hard for their children — will all see relief.
- Revamping the informational mailer sent to every property taxpayer to increase transparency and give taxpayers a better idea of where their money is going and how it’s being spent.
- Introducing common-sense fiscal responsibility practices in local government, like limiting reserve accounts to 35 percent to ensure tax dollars aren’t sitting in stagnant accounts while residents struggle to pay their tax bills.
- Increasing the business property tax exemption from $150,000 to $350,000. This will provide some much-needed relief to Iowa’s small businesses.
- Limiting TIF (Tax Increment Financing) districts to 20 years, ensuring this economic tool is used for its intended purpose—temporary development—rather than becoming permanent drains on the tax base.
- Shifting the burden of proof to the assessor when valuation increases by 10 percent or more, so that the government must justify why your bill is going up.
- Creating a $10 million government efficiency grant program to help local governments find smarter, leaner ways to operate without sacrificing quality services.
- Creating a First Home Iowa program modeled after Iowa’s 529 accounts, helping Iowans save for their first home.
- The proposal includes my language to ensure that the EMS levy is TIF protected, ensuring that when Iowans vote for this levy, the money goes to EMS as was intended.
The final property tax legislation passed and sent to the Governor will have to be a compromise proposal agreed to by both chambers and the Governor. We are making progress, but much work remains to be done. Iowans must have relief and certainty in their property taxes, and I hope we can find common ground and pass meaningful reform.
