Oklahoma Commissioner Asks Court to Strike Down New Tax

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July 21, 2010 Wednesday 04:42 PM EST

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Oklahoma Commissioner Asks Court to Strike Down New Tax

Sean P Carr

OKLAHOMA CITY

Oklahoma Insurance Commissioner Kim Holland filed a petition with the state Supreme Court to strike down a new law designed to raise revenue for the state’s Medicaid program and help balance the state’s budget, saying it is unconstitutional.

Holland asked the court to make a declaratory judgment on the law’s constitutionality and to provide guidance as her office prepares to implement it. Holland argued that H.B. 2437 is unconstitutional on three grounds: that as a bill tasked with generating revenue, a three-fourths vote of the legislature or a public referendum was required, that such a bill cannot be adopted in the final five days of the legislative session and that the state lacks the authority to implement it. The law passed the state House of Representatives 59-33 and the Senate 29-13 (BestWire, May 27, 2010).

The new law, part of a budget deal reached between Gov. Brad Henry and lawmakers, creates a Health Carrier Access Payment Revolving Fund, a 1% surcharge on paid claims of all individual and employment-based health plans. The funding is to be directed to the Oklahoma Health Care Authority to fund the state’s Medicaid program. The surcharge is projected to raise $78 million, plus a potential federal match.

Without the funding, the state is risking a collapse of its Medicaid program, said the act’s sponsor, Rep. Doug Cox, R-Grove. An emergency room physician, Cox said 620,000 Oklahomans could be left without care (BestWire, May 27, 2010). Attempts to reach Cox for comment were unsuccessful.

Insurance department spokesman Marc Young cast doubt on the revenue projections, saying regulators do not have enough data to make a comprehensive projection. “We don’t really know, ultimately,” he said.

The new tax could result in higher health insurance premiums, as health plans are likely to pass the cost on to Oklahoma policyholders, Holland said. Currently, nearly 60 percent of Oklahomans are insured by these types of plans.

The Oklahoma Supreme Court will hold a hearing in early August, Young said. The law is scheduled to be implemented on Aug. 27.

(By Sean P. Carr, Washington Correspondent: sean.carr@ambest.com)

July 22, 2010

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