Oklahoma Supreme Court rules fee on health insurance plans unconstitutional
BY BARBARA HOBEROCK World Capitol Bureau
Tuesday, August 24, 2010
8/24/10 at 5:05 PM
OKLAHOMA CITY - A bill designed to bring in millions for the state's Medicaid program is unconstitutional, the Oklahoma Supreme Court said in an order Tuesday.
The Supreme Court said that House Bill 2437 was enacted in violation of the Oklahoma Constitution.
Insurance Commissioner Kim Holland challenged the measure. The Oklahoma Supreme Court on Monday heard oral arguments on the challenge.
The court ruled the measure violated a ban on the passage of revenue bills during the last five days of the legislative session.
The court also held that the bill failed to secure three-fourths legislative approval or be submitted to a vote of the people.
The measure would have imposed an annual 1 percent fee or tax on payments made by health carriers for health and medical services for Oklahoma residents. The 1 percent would have also applied to the self-insured.
It was expected to raise $78 million a year and be matched with $190 million in federal funds in fiscal year 2011 to pay for the state's Medicaid program.
The measure was to take effect Friday.
"We do not see a reason to panic at this point," said Mike Fogarty, Oklahoma Health Care Authority chief executive officer. "Since the Oklahoma Legislature adjourned in May, the federal government has made additional funds available to states by extending the enhanced Federal Medical Assistance Percentages.
"The enhanced FMAP was set to expire Dec. 31 and it was extended until June 30, 2011."
The extension will make an estimated $140 million to $150 million available to the OHCA, Fogarty said.
The agency will work with state leaders to ensure it has the authority to use the funds to maintain a balanced budget, Fogarty said.
But the downside is that the legislature and governor will have less revenue to craft the fiscal year 2012 budget, Fogarty said.
Paul Sund, a spokesman for Gov. Brad Henry, said the governor's office will review the short-term and long-term budget implications with legislative leaders.
"Obviously, from a long-term budgeting perspective, it will be disruptive to lose this revenue source at a time when the state is pulling itself out of a historic budget crisis," Sund said.
The FMAP enhancement will help the state move forward without many disruptions in health care programs for the current fiscal year, Sund said.
"However, because those federal funds are one-time dollars that must be replaced by the state next fiscal year, Oklahoma will face significant funding challenges in health care and other important programs when the Legislature returns in 2011," Sund said.
Kim Holland, Oklahoma Insurance Commissioner, speaks at the OU Schusterman Center in Tulsa earlier this month. BRANDI SIMONS/For the Tulsa World