Insurance Commissioner Kim Holland asks court to stop new new health plan levy

CapitolBeatOK Staff Report

Published: 21-Jul-2010

Oklahoma Insurance Commissioner Kim Holland yesterday (Tuesday, July 20) filed a petition with the Oklahoma Supreme Court to block collection of a new levy on health plans mandated by the legislature. Holland’s petition questions whether the new law – House Bill 2437 — is constitutional.

“As an officer of the state, I have a sworn duty to support and uphold our state’s Constitution. After thoroughly reviewing the new law with the department’s general counsel, I believe it violates that trust,” said Holland.
H.B. 2437 creates a “Health Carrier Access Payment Revolving Fund” and compels the Insurance Commissioner to collect a new 1 percent tax on paid claims of all individual and employment-based health plans. The statute requires that the new revenue generated be transferred to the Oklahoma Health Care Authority (OHCA) to fund the state’s Medicaid program. Currently, the state’s Medicaid program is funded from the general revenue fund and matched by federal dollars based on a federally determined formula.

Holland’s petition seeks guidance from the court on several matters. The state Constitution requires that any new tax pass by a 3/4 majority of the legislature or be submitted to a vote of the people. In her press release Tuesday, Holland used the term “revenue measure” to characterize the mandate in the constitution, but several state leaders – including Gov. Brad Henry, Senate President Pro Temp Glenn Coffee and House Speaker Chris Benge – believed H.B. 2437 was constitutional. 

However, other leaders, including House Budget chairman Ken Miller, opposed the measure when it cleared the House. Miller said he thought the proposal was a tax increase, not merely a fee as advocates contended. H.B. 2437 passed by 59-33 in the House and 29-13 in the Senate, falling well short of the required supermajority. In another legal contention, Holland’s petition questions whether the state’s prohibition against passing a revenue bill within the last five days of session was violated.

Critics of maneuvers used to pass the legislation included the Greater Oklahoma City Chamber of Commerce.

Yesterday, chamber President Roy Williams expressed concern that the contentious budget accord reached of the end of this year’s legislative session could come unraveled. H.B. 2437 passed and was signed into law without an emergency clause, meaning it is not yet in effect. 

Holland said the tax could result in higher health insurance premiums, as health plans are likely to pass the cost on to Oklahoma consumers. She questions the state’s authority to tax self-insured plans – where businesses pay the costs for health care for their employers rather than buying coverage from an insurance company – which are governed by federal law. Currently, nearly 60 percent of Oklahomans are insured by these types of plans. She also expressed concerns about the accountability and transparency of the legislation.

“Helping those in need, even during difficult financial times, is an Oklahoma value,” she said. “However, so is upholding our Constitution. While I understand the Legislature’s intentions, the Insurance Department believes this law is flawed.”

About the Oklahoma Insurance Department: The Oklahoma Insurance Department, an agency of the state government, is responsible for the education and protection of the insurance-buying public and for oversight of the insurance industry in the state.

NOTE: Editor Patrick B. McGuigan contributed to this report.