Ohio sues over Obamacare taxes on state, local governments

[January 27, 2015]  By Mary Wisniewski

(Reuters) - The state of Ohio filed a lawsuit on Monday that claims Obamacare tax assessments against state and local governments for public employee health plans are unconstitutional.

The suit by Attorney General Mike DeWine involves the federal government's power under the Affordable Care Act's Transitional Reinsurance Program to levy taxes against health insurance companies and certain employers who offer self-insured group health plans.

The U.S. Department of Health and Human Services (HHS) has said it is assessing this tax on state and local governments for their public employee health plans, DeWine's office said. DeWine said this would destroy the balance of authority between the federal government and the states.

"This action simply protects a tradition as old as our republic that governments do not tax each other," DeWine, a Republican, said in a statement about the lawsuit.

The assessment costs Ohio $5.3 million, money that could be used for education, roads and other local needs, the statement said. The state wants a refund, said Dan Tierney, a spokesman for the attorney general.

Tierney said the ACA does not include state and local governments as entities that can be taxed under the reinsurance program.

The lawsuit was filed in federal court in the Southern District of Ohio, and plaintiffs include Warren County, the University of Akron and three other state universities.

An HHS representative could not comment on the pending litigation. The reinsurance program helps keep premiums affordable from year to year, according to HHS.

Republicans in Congress, some state governments and others have challenged in court all or part of the Affordable Care Act since it became law in 2010.

Last week, leading Republican senators introduced a bill to repeal one of Obamacare's most unpopular provisions: the individual mandate that requires most Americans to obtain health insurance or pay a penalty.

The mandate survived a 2012 U.S. Supreme Court challenge seeking to overturn it on constitutional grounds.

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