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Six States Win $839 Million Judgment in Obamacare Lawsuit

Six States Win $839 Million Judgment in Obamacare Lawsuit

Health Insurance Provider Fee, which is really a tax, may be the linchpin for the collapse of Obamacare

Despite the fact Obamacare hasn’t been “repealed and replaced” as promised by GOP members of the Congress, six states have just won a multi-state lawsuit against the tax policies implemented by Obamacare.

Attorney General Ken Paxton today commended a U.S. District Court decision ordering the Internal Revenue Service to repay Texas and five other states more than $839 million because of an unlawful Obamacare tax on state Medicaid programs….

“Obamacare is unconstitutional, plain and simple,” Attorney General Paxton said. “We all know that the feds cannot tax the states, and we’re proud to return this illegally collected money to the people of Texas.”

In October 2015, Attorney General Paxton led a multistate lawsuit against the federal government over the Obama-era regulation that threatened to choke off Medicaid funds for the health needs of millions of Texas citizens unless Texas taxpayers paid a portion of the Health Insurance Providers Fee to help fund Obamacare.

The monies Texas and the other states are to receive in this judgment are as follows:

  • Texas: $304,730,608.
  • Indiana: $94,801,483
  • Kansas: 142,121,776
  • Louisiana $172,493,095
  • Wisconsin: $88,938,850
  • Nebraska: $36,238,918

The “tax”, which was marketed as a “fee”, may be the linchpin for the collapse of Obamacare, as the example of Kansas shows.

The fee, called the Health Insurance Provider Fee, is one part of the Affordable Care Act enacted under President Barack Obama. The federal government imposed the HIPF on medical providers but states were exempt.

Kansas, being a state that contracts with private managed care organizations to operate Medicaid programs, was hit with the fee. The reason, Kansas Attorney General Derek Schmidt says, is the federal government imposed the fee on the private care organizations, then adopted a regulation requiring the organizations to pass the cost to the state.

Schmidt said the federal government was collecting the money illegally. Kansas, along with Indiana, Texas, Louisiana, Nebraska and Wisconsin filed a lawsuit claiming this fee was an issue back in 2016.

Indiana’s Attorney General is delighted with the ruling.

“The feds wrongfully took Indiana’s money to fund Obamacare,” said Attorney General Curtis Hill said. “Since the federal government cannot tax the states, we are pleased to return this illegally collected money to Hoosiers.”

Hill’s office said Indiana joined the multistate lawsuit when “federal authorities threatened to withhold Medicaid funds unless state taxpayers paid a portion of the Health Insurance Providers Fee to help fund the Affordable Care Act, otherwise known as Obamacare.”

Nebraska’s Attorney General Doug Peterson echoed those sentiments.

“The federal government is not able to tax the states because of the unconstitutional constructs of Obamacare,” Attorney General Peterson said, “and the portion illegally collected from Nebraska should be returned to our state.”

According to Paxton’s office, Texas and Wisconsin will argue at a hearing on September 5 that Obamacare, as amended by the recent tax bill, is unconstitutional in its entirety.

Perhaps the courts, filled with Trump-appointed judges, may do the job Congress was unable to do.


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Bucky Barkingham | August 26, 2018 at 2:21 pm

The IRS that is supposed to refund this money is the same one that ignores and slow walks court decisions that go against it.

I’ll bet that by amazing coincidence, the KS Supreme Court decides that the school system needs exactly $142,121,776 more money this year. (Yeah, call me a cynic, but just wait)

Where do the dollars come from?

legalizehazing | August 26, 2018 at 3:24 pm

Don’t tease me

& the other 44 States?

Will Democrat dominated States maintain their “Obamacare Principles” or go for the $?

    Edward in reply to Icepilot. | August 26, 2018 at 5:49 pm

    The other states, both those who believed this was a loser of a case and those which opposed not paying the tax, will only be able to recover their previously paid funds and avoid continuing to pay the tax* by filing their own legal actions and take their chances with the District Courts and other Circuit Courts. Ken Paxton tried to get more states to join the suit, but even knowing that the Appeals Court was the Fifth Circuit couldn’t convince more states to join.

    * unless and until the SCOTUS declares it unconstitutional

“Perhaps the courts, filled with Trump-appointed judges, may do the job Congress was unwilling to do.”


    I do like that better. Thanks!

    JackRussellTerrierist in reply to redc1c4. | August 26, 2018 at 4:41 pm

    The swooned over John McCain comes to mind.

    Subotai Bahadur in reply to redc1c4. | August 26, 2018 at 9:22 pm

    As a matter of practical precedent, this increases the irrelevancy of Congress; giving that they are desperate to abdicate all real responsibility to the courts and executive. Eventually it will be noted that absent responsibility, there is no reason for them to have power.

    Call it the “teats on a boar hog principle”.

Ken Paxton pur forth two legal theories in this suit:

1. The Federal government can’t tax the states*; and,

2. The Congress abdicated it’s taxing responsibilities by passing this Obamacare tax (AKA Fee) on to the Centers for Medicare and Medicaid Services, which wrote the regulation giving the tax assessing and collection power to a private entity.

The District Court dismissed #1 and agreed with #2, finding for the states involved. Paxton believes he can bring #1 back in with the Fifth Circuit, particularly with an eye toward the SCOTUS appeal (if the Feds appeal that far instead of leaving it applicable to the Fifth Circuit and the states involved in the suit).

* I seem to recollect some old precedent involving the power of taxation being the power to destroy.

    Edward in reply to Edward. | August 26, 2018 at 5:56 pm

    put dammmit

    bhwms in reply to Edward. | August 27, 2018 at 11:47 am

    Help me out – prior to the Income Tax, wasn’t one form of revenue to the federal government an assessment to each state?

      puhiawa in reply to bhwms. | August 27, 2018 at 12:43 pm

      The Federal government was funded by excise taxes,fees, tariffs,and land sales. Any product that was manufactured, mined or grown, by more than one State (even theoretically) could be taxed, thus alcohol was heavily taxed. The US government had the right to tax real property, so long as the tax was equal throughout the nation, but abolished the practice in 1802. I believe Jefferson decided it was too cumbersome and intrusive.

When is someone going to jail?

    Subotai Bahadur in reply to Guy Gadbouis. | August 26, 2018 at 9:32 pm

    No one with political connections in either branch of the Uniparty will be jailed. Being above and outside the law is their reason for existing. The rest of us, maybe because they can.

Justice Roberts will call it a fee and……oh wait. He already tried that dodge.

Can citizens of a state that is paying this unconstitutional fee sue to force their state to stop?

buckeyeminuteman | August 27, 2018 at 10:27 am

Thanks to McCain and the ineptitude of Ryan, Obamacare is alive and well. Looks like state governments may be able to do what Republicans only dared to talk about.

It should have been called Appropriated Health Care Act.

Imagine how much good they could have done if they had not squandered trillions to fool the rubes into a single payer system. All the wasted money, all the people who did not get adequate care – very sad.

I just checked websites for the Wichita Eagle, Topeka Capital-Journal, and Kansas City Star. Not a word about this judgement.

Probably just a harmless oversight, right?/

Good deal. Shove this up John McStains dead nose and the gutless other RINO’s and leftists that have earnestly guarded the continuation of this illegal program.