It was a wild and crazy ride in Oklahoma yesterday. We had multiple runoff elections being conducted as we move closer to the general election in November. While all of that was going on, there was something else that may have slipped under the radar of most people. As is the case with a lot of news stories in the past couple of years, it has something to do with health care. Right before the Oklahoma State Legislature adjourned in May, they managed to pass what amounted to a tax to raise an estimated $78 million. In the body of House Bill 2437, this measure levied a 1% fee to be paid by health insurance companies on the claims they paid in Oklahoma.
When this measure passed, there were multiple concerns about it’s constitutionality. I’m not sure how other states handle legislation like this but in Oklahoma, we have a couple of items in our Constitution that is supposed to prevent measures like this from being passed in the waning days of any particular legislature. For starters, no legislation that raises revenues for the state can be passed in the last five days of the legislative session. To back that up, State Question 640, which was passed in 1992, requires that any such measure to have a two-thirds majority or be put before a vote of the people before it can be signed into law by the governor. HB 2437 fails both of these tests and shortly after Governor Brad Henry signed it into law, Oklahoma State Insurance Commissioner Kim Holland filed a lawsuit on July 20 to challenge it’s constitutionality.
The lawsuit came as no surprise to anyone and the Oklahoma State Supreme Court handed down it’s ruling yesterday, a mere three days before the fee was to go into affect on Friday. From CapitolBeatOK:
At the state High Court, voting to slap down the tax increase were Chief Justice James Edmondson, Vice Chief Justice Steven W. Taylor, and Justices Yvonne Kauger, Joseph Watt, James Winchester and Tom Colbert. Justice John F. Reif dissented in part. Although he agreed the court had jurisdiction in the case, he asserted the claims levy “is a constitutionally permissible fee related to the provision and regulation of health insurance” in Oklahoma.
Justices Marian Opala and Rudolph Hargrave dissented in the case, saying the court did not have original jurisdiction, and should have sent Holland to district court to challenge the law. They contended facts presented to the court “do not show conclusively that the levy imposed by the enactment sought to be condemned was in fact a true tax.”
On the other hand, the dissenting pair of jurists argued a district court proceeding “might readily disclose from nonfacial proof the attacked enactment’s status as a pure revenue measure subject to judicial condemnation.” They concluded the Supreme Court should not have assumed original jurisdiction, without prejudging the merits of a district court test of the law.
Now that HB 2437 has been prevented from going into affect, the state Legislature will have to come up with other funds to balance the state budget, which is another Constitutional requirement. According to Oklahomans For Responsible Government, there are ways to deal with that. The state may also be able to rely on some federal funds. At any rate, they should have done this in the first place, instead of passing a law that was so clearly unconstitutional. It would have saved us all the time and effort it took to find out the obvious.
Glad to hear that the constitution of your state was upheld. it seems like this was a pretty cut and dried case. It is interesting to see the way so many politicians try to do whatever they want in the face of the constitutions,they simply think they can do whatever they want.
I don’t think relying on federal funds is a great answere either. Maybe in the short term it is, but if these are just one time funds than you are only prolonging the problem. The real problem is going to have to be dealt with eventually.