Not that they will get anywhere……..
Thought the litigation battle over Obamacare was over? Think again. Texas, Kansas, and Louisiana are about to file a new lawsuit against Obamacare, claiming that a fee being imposed by the IRS as a condition of states continuing to receive Medicaid funds is both unconstitutional and a violation of federal law. And they are in discussions with more than a dozen other states about joining this new lawsuit.
The complaint, which Texas plans to file in federal court in the Northern District of Texas on Wednesday, explains that all fifty states use managed care organizations to provide a portion of their Medicaid services. Medicaid is the federal program that provides health coverage for low-income families, children (the Children’s Health Insurance Program or CHIP), and the disabled, among others.
The states pay those organizations a monthly rate, like an insurance premium, for every Medicaid enrollee they cover.
Because Medicaid is an entitlement program, states cannot limit the number of eligible people who can enroll, and they have to pay for all services covered under the Medicaid program.
This is a very expensive and large entitlement program: according to the complaint, Texas provides Medicaid services to one of every seven Texas residents, and the cost accounts for 26 percent of the state’s annual budget. Louisiana provides Medicaid services to three out of every ten state residents.
An Expensive Fee Levied Against States
The Centers for Medicare and Medicaid Services, which is the federal agency that administers federal health insurance programs like Medicare and Medicaid, has a rule that requires states to pay their Medicaid managed care organizations “actuarially sound rates” to cover the health services provided. That rule also delegates the decision of what is an “actuarially sound rate” to the Actuarial Standards Board, a private, non-governmental entity.
The Obamacare law—the Patient Protection and Affordable Care Act—which was previously upheld by the U.S. Supreme Court in 2012 in NFIB v. Sibelius, imposes a “Health Insurance Providers Fee” on private insurers to help pay for the subsidies provided by the federal government to individuals purchasing health insurance.
In 2014, the total amount of that fee imposed on all insurers was $8 billion, according to the lawsuit; it is expected to increase to $14.3 billion by 2018. The Actuarial Standards Board decided that the “actuarially sound rate” paid by states to their Medicaid managed care organizations must include their portion of the Health Insurance Providers Fee.