States Sue Obama Administration Over Obamacare Fee

Date: March 02, 2016 Last Edit: March 03, 2016

Six States Allege Health Law Didn’t Make It Clear They Would Be Liable For Fee

The burdens of this administration’s aggressive regulatory agenda are well known among small businesses, particularly when it comes to Obamacare. Now, a new case has shed light on one problematic aspect of the healthcare mandate. The AP reported that six states – Texas, Wisconsin, Kansas, Louisiana, Indiana and Nebraska – filed a new lawsuit against the Obama Administration over Obamacare. The complaint, filed in the Northern District of Texas, involves an argument against the Health Insurance Providers Fee that is currently levied upon health insurers in order to cover federal subsidies. This fee is the same tax that is passed along to small business owners in the form
of higher premiums. 

The lawsuit said there is nothing in Obamacare’s language that provides any clear notice that states would also have to pay the fee. The AP explained 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.” The plaintiffs are seeking “an injunction” against the Federal payment rule, and also seeks a refund to states for what they’ve had to pay under the Health Insurance Providers Fee. According to the suit, states would pay between $13 billion and $15 billion in fees to the Federal government in the next 10 years. In Wisconsin alone, Attorney General Brad Schimel’s office said the state paid at least $23 million in fees during 2014 and 2015. The Milwaukee Journal Sentinel reported that Wisconsin’s $23 million in fees makes up about 42% of total Medicaid program costs. The Federal government pays roughly 58% of these costs.

What This Means For Small Businesses

Small business owners know the burdensome effects of Obamacare, which has increased the costs of doing business across the US. This latest case is yet another example of the deleterious consequences of imposing this one-size-fits-all mandate on individual states, which like small business owners, want the freedom to craft healthcare regulations that best balance coverage with costs. Increased Medicaid costs for states could lead to tax increases for small business owners. NFIB continues to fight for repeal of the costly fee, and was able to lobby successfully for the suspension of the fee for the year 2017 in the 2015 year-end tax package.

Additional Reading

The Dallas Morning News also covered the suit. Modern
previewed the impact of the one-year suspension of the fee in 2017.

Note: this article is intended to keep small business owners up on the latest news. It does not necessarily represent the policy stances of NFIB.

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