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Letter to Oklahoma State Governor Henry

June 9, 2010
By Pete Sepp

The Honorable Brad Henry
Governor, State of Oklahoma
2300 N. Lincoln Blvd., Room 212
Oklahoma City, OK 73105

Dear Governor Henry:

     On behalf of the National Taxpayers Union's (NTU's) 362,000 members nationwide and our more than 4,700 members in Oklahoma, I urge you to veto the Legislature's tax increase on health care services that is now on your desk. Although we are aware that you support the imposition of such a tax, we believe that this bill will endanger the sanctity of the state's constitution for political expedience.

     As you may know, NTU opposed the health care provider tax for policy reasons, well before constitutional issues arose. Hundreds of thousands of insurance policyholders will pay this tax in the form of higher premiums or out-of-pocket costs as providers are forced to cut back on benefits or lay off employees to remain in business. Insurance market innovators, such as mail-order pharmacies, will also be penalized for delivering convenient and cost-effective options for customers.

     This anti-business image is something Oklahoma can ill afford, especially given that it is neighbor to a state with no income tax and borders other states with competitive tax policies. Meanwhile, the true cost-drivers of health care in Oklahoma – stagnant, one-size-fits-all public programs – will remain virtually unreformed, while supporters of the higher tax claim it holds the hope of more federal matching funds to fill out program budgets. This is ultimately a self-defeating solution, as additional federal mandates along with more subtle policies of federal control flow from Washington and strain state budgets ever more heavily.

     There are better options for the state to contain health care costs and address budget deficits than enacting new taxes. For example, the Georgia House of Representatives voted to open its individual health insurance market to plans offered in other states, provided that Georgia's insurance commissioner licenses the plans and describes all of the benefits they will provide. Other states, ranging from Indiana to West Virginia to Minnesota, have pursued changes to their health programs that tackle wasteful expenditures, empower consumers, and help to expand the net of coverage.

     Nonetheless, even if you are not persuaded by these arguments, this tax involves a fundamental question surrounding the rule of law. Clever linguistic gymnastics on the part of legislative supporters notwithstanding, the health provider "fee" is a mandatory government exaction levied for the purpose of raising funds, and is therefore a tax. The legislation proposing this tax meets every rational definition of a revenue bill which, according to the state constitution, may not become law if it is enacted in the final five days of the legislative session.

     This provision of the constitution is intended to instill some accountability to the fiscal policymaking process, and to prevent last-minute tax hikes that do not permit a robust public debate. The health care tax scheme has trampled upon this constitutional safeguard, and will deservedly invite legal challenge if allowed to proceed.

     Laws should be more than ornamental, and those elected to office should not regard them as inconveniences to be swept aside when some "crisis" exists. Indeed, it is precisely during times like these that the constitution's boundaries for establishing policy are most relevant and should not be violated.

     We understand the difficulties that you and your colleagues face in closing Oklahoma's budget gap, but even at this late point, there is still time to reexamine possibilities for expenditure reductions. NTU's team stands ready to assist you in this regard and in so doing help to uphold the constitution of your state.


Pete Sepp
Executive Vice President