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Affordable Care Act

Texas Attorney General Ken Paxton Sues The Feds Over Obamacare

The Republican argues a fee in the Affordable Care Act is an “unconstitutional tax.”


Texas Attorney General Ken Paxton has sued the Obama administration over a fee that its signature health law imposes on states via insurers operating under the medicaid program.

Paxton’s office joined Kansas and Louisiana in filing the suit on Thursday. 

The Republican argues that the “health insurance providers fee” contained in the Affordable Care Act forces “states to effectively pay an unconstitutional tax.” The attorney general argues it cost Texas $86 million in 2013 and around $120 annually since then.

In a statement, he listed four reasons why he believes it’s unconstitutional:

  • The U.S. Constitution requires that state officials “clearly understand” what conditions the State is agreeing to when accepting federal funds. Yet, the Obamacare legislation is completely silent as to whether state taxpayers must pony up to pay for Obamacare or risk losing necessary Medicaid and CHIP funds. The federal government contrived this new scheme, and the states were recently required to pay.
  • It represents coercion, which the U.S. Supreme Court ruled was not allowed in the first Obamacare decision,NFIB v. Sebelius. In that ruling, the Supreme Court held that threatening a percentage of a state’s budget unless it agreed to expand Medicaid was coercion. This same funding is at risk again if states refuse to pay the tax.
  • It delegated the duties of Congress to a private entity, which violates the delegation doctrine prohibiting private entities from exercising legislative authority.
  • The new regulation represents a tax on the states, so it violates the constitutional doctrine prohibiting the taxation of a sovereign state.

The fee applies to private insurers, but Paxton said it eats into public budgets since states reimburse private firms under Medicaid.

Texas has been part of numerous lawsuits aiming to dismantle the contentious federal health care law, commonly known as “Obamacare.” The health care law has twice been upheld by the U.S. Supreme Court.

Click here to see the complaint filed in federal court.