Dive Brief:
- Texas, along with Kansas and Louisiana, has launched a new challenge against the ACA over an alleged “unconstitutional Obamacare tax.”
- Texas complains it is paying $120 million per year to cover the fee and is asking to have its money returned.
- Health law expert Tim Jost of Washington and Lee University suggests the case is not very strong because states cover other related taxes paid by Medicaid managed care organizations.
Dive Insight:
The lawsuit, filed October 22, came days after another ACA challenge, House v. Burwell, was allowed to move forward and the White House called for a stop to the “endless lawsuits” over the ACA, The Hill notes.
In this case, the issue is the Health Insurance Providers Fee, imposed on health insurers to help cover the costs of the law. Texas Attorney General Ken Paxton says the state feels the impact because it reimburses insurers serving the state's privatized Medicaid program for that fee. He says it cost Texas $84 million in 2013 and about $120 million each year since.
The states say because the fee is passed on to them, and payment is a condition of receiving federal Medicaid funds, it amounts to coercion.
“This threat to cut Medicaid funding to Texans unless the state continues to pay hundreds of millions in taxes to Washington amounts to the very ‘gun to the head’ the Supreme Court warned about in earlier rulings on Obamacare,” Paxton argued in a prepared statement. “Not only is the federal government threatening the healthcare needs of millions of Texans, but it is doing so using Texans’ own money, collected from them through taxes."