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State challenges health care reform law's reinsurance fee

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The state of Ohio and several Ohio public entities, including universities, filed suit Monday in federal court challenging as unconstitutional a health care reform law-authorized program that requires employers to pay billions of dollars to the federal government.

The assessment under the Transitional Reinsurance Program is intended to raise $25 billion in revenues over a three-year period. The money is to be used by the federal government to partially reimburse commercial insurers with high health costs and who write coverage on public insurance exchanges.

The 2014 fee is $63 for each health care plan participant, while the 2015 fee is $44 and the 2016 fee is $27.

But the lawsuit, filed in U.S. District Court for the Southern District of Ohio in Columbus says the Patient Protection and Affordable Care Act-created reinsurance fee is “illegal and unconstitutional as applied against states and their instrumentalities.”

Congress, according to the suit, “nowhere provided for these taxes to apply against the states and their instrumentalities.”

The legal “action simply protects a tradition as old as our republic that governments do not tax each other,” Ohio Attorney General Mike DeWine said in a statement, adding that the $5.3 million Ohio is being assessed is money that could be used for education, public safety and roads and bridges.

Employers groups also staunchly oppose the fee because they say employers would receive no direct benefit from it. Legislation was introduced in the last congressional session to repeal the fee, but lawmakers did not act on it.

Aside from the state of Ohio, parties joining the lawsuit include Warren County, Ohio, the Ohio Department of Administrative Services, the University of Akron, Shawnee State University, Bowling Green State University, and Youngstown State University.