Kansas AG Schmidt files another Obamacare challenge

Kansas Attorney General Derek Schmidt on Thursday joined in another multi-state lawsuit challenging a portion of the Affordable Care Act, this time disputing fees the states claim are an unconstitutional tax on states.

Schmidt, a Republican, joined Louisiana and Texas in challenging fees that are assessed against insurance companies hired to manage state Medicaid or Children’s Health Insurance Programs.

The states argue the fees are required to be passed on to the states, making them a “de facto tax” on state treasuries, which they say is unconstitutional.

“If the federal government wants to tax and spend, it may do so within the confines of the law,” Schmidt said in a statement released Thursday afternoon. “But it may not, we think, employ accounting tricks that force the states to do the taxing while the federal government does the spending.”

Kansas currently contracts with three private insurance companies to manage its Medicaid program, known as KanCare. Schmidt said in the first year of the tax, the insurance provider fee cost Kansas $32.8 million. The lawsuit seeks a refund of that amount and an order prohibiting future collections of the fee.

The lawsuit, filed in federal district court in Wichita Falls, Texas, is just the latest in a series of legal challenges Schmidt leveled against the Affordable Care Act, also known as Obamacare.

Last year, Schmidt joined with 19 other states in another Texas-led challenge, arguing that since a provision of the law known as the “individual mandate” has been interpreted as a tax, then the law is unconstitutional on procedural grounds because tax bills must originate in the U.S. House, and the Affordable Care Act was a Senate bill.

He has also joined in challenges of the law’s mandate that employers over a certain size must provide health coverage to their workers. In that challenge, he argues that the employer mandate should not apply in states like Kansas that chose not to set up their own state-based health insurance exchange markets.

Schmidt also joined in a lawsuit filed by Hobby Lobby that challenged a requirement that employer-based health policies cover contraception.

Republican Gov. Sam Brownback issued a statement supporting Schmidt’s lawsuit, calling the provider fee “just one more instance of an overreaching federal regulation designed to coerce states into funding or participating in Obamacare.”