Three States Sue Federal Government Over ‘Unconstitutional’ Obamacare Tax

Attorneys general for Texas, Kansas and Louisiana filed a joint lawsuit last Thursday against the federal government in U.S. District Court for the Northern District of Texas over what they claim is an “unconstitutional” Obamacare tax that will cost the 50 states more than $14 billion over the next decade.

In March, states were first notified by the Centers for Medicare and Medicaid Services (CMS) that they would be assessed a Health Insurance Providers Fee - “a lump sum on all covered health insurance providers collectively, starting at $8 billion total in 2014 and increasing to $14.3 billion by 2018” - according to the lawsuit.

“The purpose of the fee was to generate revenue from a windfall Congress expected insurers to receive by increasing enrollment” under Obamacare to help pay for the law’s subsidies.

The White House has been forced to downgrade its Obamacare enrollment projections to just 10 million people by 2016 – less than half of the 21 million enrollees previously estimated by the Congressional Budget Office.

However, the federal government is threatening to cut off Medicaid and Children’s Health Insurance Program (CHIP) funding to states that refuse to pay the fee. More than 72 million people were enrolled in Medicaid and CHIP as of July, according to CMS.

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