Applying a tax to state and local governments designed to help keep premiums affordable under the federal healthcare law is unconstitutional, Republican Ohio Attorney General Mike DeWine claimed in a lawsuit last week.
The complaint argues there's no precedent for the collection of $6.25 million from government entities for 2014 and nothing in the Patient Protection and Affordable Care Act that allows such a tax.
The lawsuit also challenges a reinsurance program provision in the law that calls for a portion of the money collected to go directly into the federal Treasury's general fund, rather than the healthcare program. At issue is a provision in the healthcare law permitting tax assessments against health insurance companies and certain employers that offer self-insured group health plans.
The government lacks constitutional authority to impose “such broad-based, revenue-generating taxes” against states and local governments, according to the lawsuit. It seeks to have the money returned and to halt similar assessments for 2015 and 2016.
The lawsuit is a follow-up to a Jan. 8 letter sent to HHS Secretary Sylvia Mathews Burwell protesting the tax, DeWine said in a written statement. The suit is believed to be the first legal challenge to the tax. —Associated Press