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6 states sue Obama administration over Affordable Care Act

February 25, 2016

Six states, including Indiana, filed a new lawsuit Wednesday against the Obama administration over the Affordable Care Act.

The complaint that Texas, Wisconsin, Kansas, Louisiana, Indiana and Nebraska filed in the Northern District of Texas takes issue with the Health Insurance Providers Fee assessed to health insurers to cover federal subsidies.

The lawsuit says nothing in the Affordable Care Act's language provided clear notice that states would also have to pay the fee.

In 2014, Indiana was mandated to pay $17.4 million for the Health Insurance Providers Fee under the ACA, and that annual amount is expected to increase in coming years as more enrollees are added to the state's Medicaid programs, according to a statement from the Indiana Attorney General's office.

"This notice was not even provided by rule but was ultimately provided by a private entity wielding legislative authority," the suit says.

The suit seeks an injunction against the federal rules that say states are responsible for the fee. It also asks that states be refunded for what they've already paid.

The federal government has determined states must pay a portion of the fee to their Medicaid managed care organizations to then pay to the federal government. States get some reimbursement from the federal government for that money, but they end up losing 54 cents for every dollar of the insurance tax.

The funded portion of Indiana's $17.4 million fee is approximately $5.8 million, according to the AG's office.

The suit says the fee is projected to allow the federal government to collect between $13 billion and $15 billion from states over the next decade.

“We contend it is unconstitutional under intergovernmental tax immunity for the federal government to impose a tax upon a state government, and that’s what this fee does. States now have no choice but to pay this tax or risk the loss of their essential federal Medicaid funding that underpins patient coverage for our neediest citizens; so the only avenue for questioning the legality of this is to bring the question to the federal court and let the court decide,” said Indiana Attorney General Greg Zoeller in a statement.

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