COLUMBUS, Ohio — A tax levied on state and local governments under President Barack Obama’s federal health care overhaul is constitutional, a judge ruled, dismissing a lawsuit by Ohio Attorney General Mike DeWine.
The 2015 lawsuit argued there was no precedent allowing the collection of approximately $6.4 million the previous year from government entities and nothing in the federal health care law that allowed such a tax.
At issue is a provision in the law permitting tax assessments against health insurance companies and certain employers who offer self-insured group health plans to help keep premiums affordable.
The government lacks constitutional authority to impose “such broad-based, revenue-generating taxes” against states and local governments, the lawsuit said. It sought a return of the money and stopping similar assessments for 2015 and 2016.
Federal Judge Algenon Marbley on Tuesday called the law constitutional because it regulates state and local governments in their capacity as employers.
In addition, the law passes muster because it “does not commandeer the legislative or executive apparatuses of state or local governments, and does not discriminate against state or local governments in the contributions imposed,” Marbley said.
Parties to the lawsuit included the Ohio Turnpike Commission; Warren County; Shawnee State, Bowling Green State and Youngstown State universities; and the University of Akron.
DeWine disagrees with the decision and plans an appeal, said spokesman Dan Tierney.
The Department of U.S. Health and Human Services has said the law has helped keep premiums affordable, with eight of 10 people enrolled in the federally run insurance marketplace as of December 2014 getting coverage for $100 or less per month after tax credits last year.
The lawsuit challenged the following assessments: $5.4 million from the state, $94,710 from Warren County, $92,043 from the Ohio Turnpike Commission, $325,584 from the University of Akron, $275,247 from Bowling Green State University, $108,517 from Youngstown State and $56,007 from Shawnee State.
The portion of the health care overhaul act being challenged is the Transitional Reinsurance Program.