Health fee furor: Brogdon spoke up, Alelson speaks out, Holland acts
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Published: 21-Jul-2010

Patrick B. McGuigan

Published: 21-Jul-2010

As the Legislature rushed toward adjournment in late May, state Sen . Randy Brogdon of Owasso was one of the legislators voicing concerns over the wisdom and legality of House Bill 2437, the new fee (or levy, or tax – depending on how the issue is viewed) on health insurance claims.

Yesterday (Tuesday, July 20), Insurance Commissioner Kim Holland, a Democrat, moved in court to block collection of the new levy on health carriers, saying the new law’s provisions violated state and possibly federal provisions. The law put a one percent fee on claims of all individual and employment-based health plans.

Holland has joined a chorus of concerns about the fee, including those of at least one key legislative Republican, state Rep. Ken Miller of Edmond. Miller and Holland have not been alone in criticizing the structure and mechanisms in the new law.

On Monday of the last week of this year’s session, Sen. Randy Brogdon, a Republican, expressed “outrage” after colleagues voted to create the fee. He said the move was in direct violation of the state Constitution. In a release sent to CapitolBeatOK at the time, he commented:

"Article 5, Section 33 of the state Constitution says no revenue increase should be passed during the last five days of the session, which would be any time this week. This is basically a $78 million tax increase. The 'yes' votes on this bill Monday [May 24] were in direct violation of the Oklahoma Constitution."

The law, later signed by Governor Brad Henry, establishes an “access payment” of one percent that health carriers will pay on claims paid until January 1, 2015. Brogdon at the time said:

"Proponents of this bill keep arguing that this is a fee increase for insurance companies, but let's be honest with ourselves. If fees are raised for insurance companies, they're going to pass those costs on to their customers - the citizens of Oklahoma.

"I'm so disappointed in my colleagues. Their vote … not only violated the Constitution, but they also disregarded the needs of their constituents by approving this fee increase, which will hurt citizens financially who are already over taxed.”

Rep. Miller, the Edmond Republican who has served as House Budget and Appropriations Committee Chairman, stated his opposition to the measure as it worked its way through the Legislature. He contends the new levy is clearly a tax, not merely a fee.

Today (July 21), state Sen. Tom Adelson, a Tulsan and Holland’s fellow Democrat, reacted to her legal filings with a sharply critical press release. Adelson said:

“The legal challenge by Insurance Commissioner Kim Holland jeopardizes the health of thousands of Oklahomans and the financial condition of dozens of hospitals and nursing homes. I am deeply disappointed. Given her advocacy this past session in support of a dedicated insurance fee and her efforts these past two years to expand coverage for the uninsured, I am also surprised by her apparent policy reversals.

“This past session, Commissioner Holland helped draft [Senate Bill]  1616, providing a dedicated fee of up to 4 percent on all insurance claims paid by the privately insured. The bill created a revolving fund ‘to provide access to health insurance to uninsured Oklahomans and to maximize the ability of the state to secure all possible federal funds, grants or matching funds.”

In his statement, sent to CapitolBeatOK, Sen. Adelson continued: “Commissioner Holland’s conclusion that the challenged legislation (HB 2437) is unconstitutional is premised upon the following language change between S.B. 1616 as quoted above and the following from H.B. 2437: ‘the revolving fund shall be used to fund the state’s Medicaid program and make full use of any federal matching funds available to the state.’

“It’s possible that Commissioner Holland believes that the dedicated insurance fee’s emphasis on Insure Oklahoma in S.B. 1616 represents a significant distinction. But more than 40 percent of participants in Insure Oklahoma enroll in the public plan administered by the state’s Medicaid agency. In other words, the legislation under both versions of the bill could be utilized to subsidize insurance in the public plan.  Commissioner Holland’s statement that the dedicated insurance fee she supported was not related to Medicaid is not accurate.”

Adelson pressed Holland to “disclose her communication with the State Chamber of Commerce and the insurance companies she regulates pertaining to all matters relating to her legal challenge.”

Sen. Adelson asserted: “The Oklahoma Legislature acted courageously to protect hundreds of thousands of Oklahomans from disastrous cuts to the state’s Medicaid program and to save dozens of Oklahoma hospitals and nursing homes from possible closure. The legislation was not for the politically fainthearted.  But politics when it really matters rarely is.”

As for Commissioner Holland, this is not the only matter in which she has disagreed with some fellow Democrats. In June, she expressed disappointment when Gov. Henry vetoed Senate Bill 2052, a bill aimed at combining some elements of the HealthChoice program that serves state government employees, and controlling costs for education and other government workers.

In that instance, Holland agreed with Republican legislative leaders about the merits of S.B. 2052, saying,

"The efforts of the House and Senate working group were thorough, deliberative and inclusive. Our goal was to maintain competitive benefits for our state and education employees and their families while reducing costs to those employees and to state agencies. We accomplished our goal and I am disappointed by the veto."

On the claims fee (or tax, some call it), she parted company from both the governor and most Republican leaders. She agreed with a sizable minority in the Legislature, however, where 33 representatives and 12 senators opposed the new fee.

In legal papers filed at the State Supreme Court yesterday, Commissioner Holland said the fee is unconstitutional and that she has no authority to collect it. She also contended it is a tax and not a fee under article V of the state constitution, including the provisions of State Question 640, a ballot initiative requiring popular approval for new taxes. Holland also contends the new law is unenforceable under the Employee Retirement Income Security Act (ERISA), federal legislation she contends limits state actions as a matter of policy.

 

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