Six states filed suits in federal court against a provision of the Patient Protection and Affordable Care Act that requires states to pay a portion of a fee imposed on insurers.
The Health Insurance Providers Fee is aimed at insurers, which pay the fee, based on their share of the Obamacare plan market. The Obama administration says that states are obligated to pay a part of that fee to the insurers that participate in their Medicaid programs. Those insurers then pay the federal government, which then reimburses the states at roughly 50 percent.
Sound confusing? The six attorney generals from the states filing the suit agree.
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"This notice was not even provided by rule, but was ultimately provided by a private entity wielding legislative authority," the suit says, according to the Associated Press.
The six states suing are Texas, Louisiana, Wisconsin, Indiana, Kansas, and Nebraska. It is not surprising to see most of those states participating in the federal suit aren't Obamacare proponents; all but one have Republican governors.
Although Louisiana recently elected a Democratic governor who campaigned largely on the promise of using the PPACA to expand Medicaid in the Bayou State, the state attorney general is still a Republican.
The IRS anticipates receiving $11.3 billion this year from the fee, a small portion of which will come from states. The states' suit alleges that the feds will generate $13-15 billion from the state fees over the next decade, suggesting the states will pay between 10-15 percent of the fees collected.
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