Oklahoma Insurance Tax Unconstitutional?


Extract from Aetna’s Health Reform Weekly (Week of 7/26/10) Following is an update to the status of OK HB 2437-

 OKLAHOMA: Insurance Commissioner Kim Holland filed a petition with the Oklahoma Supreme Court last week seeking to prevent the application of a new tax on health plans enacted earlier this year. The petition challenges the new law’s constitutionality. The legislation creates the Health Carrier Access Payment Revolving Fund and imposes a tax of 1 percent on all paid claims for individual and employment-based health plans, to be collected by the Insurance Department beginning August 27. The Oklahoma Health Care Authority will disperse an estimated $240 million in additional funds to pay for the state’s Medicaid program. The petition argues that the state constitution requires that any revenue measures must pass at least three-quarters of the legislature or be submitted to a vote of the people. The new health plan tax did not. Additionally, the petition argues that the bill violates the state law that prohibits the passage of any revenue bill within five days of adjournment. Commissioner Holland also questioned the transparency and accountability of the legislation as well as the state’s authority to tax self-insured plans that are fully funded by employers and subject to federal ERISA law. Other large self-funded plan entities are expected to join her lawsuit and challenge the law on ERISA grounds as well. Aetna will be closely monitoring the litigation going forward.