The American Council of Life Insurers has filed a lawsuit against the D.C Health Benefit Exchange Authority challenging the constitutionality of a tax on insurers meant to fund the D.C. health insurance exchange, according to a Washington Post report.
In May, D.C. passed legislation that imposed a 1 percent tax on gross premium receipts on all health insurers in D.C. to help fund the district's health exchange when federal funding for the exchange ends.
In its complaint, the group alleges the tax is a violation of the Fifth Amendment, as not all insurers were permitted to sell products on the exchange and not all insurers benefited from the exchange. The group claims only those insurers who are eligible to participate in the exchange can be taxed under the Patient Protection and Affordable Care Act, according to the report.
The court's decision in this case will help provide guidance to other states that are exploring options to help fund their own health insurance marketplaces.
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