LANSING (AP) - A new Michigan law that will place a 1 percent tax on health insurance claims faces a court challenge.

The Self-Insurance Institute of America Inc. filed a suit challenging the law Thursday in federal court. The suit says the Michigan assessment is preempted by federal law and should be blocked related to self-insured group health plans.

The Michigan assessment begins Jan. 1 to help fund Medicaid programs. It would be paid to the state by insurers or HMOs

It's expected to raise about $400 million a year and help the state draw more federal funds for Medicaid.

The new law eliminates a 6 percent use tax on Medicaid managed care organizations.

Gov. Rick Snyder's spokeswoman Sara Wurfel says the change was the "right thing to do" and is constitutional.

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