In the lawsuit filed in the U.S. Supreme Court, Texas Attorney General Greg Abbott argued that states should not have to relinquish taxpayer dollars for a program offered by the federal government.
He called the funding system "a direct tax upon Texas and other states in violation of the U.S. Constitution."
The attorneys general of Kentucky, Maine, Missouri and New Jersey joined in the lawsuit. Ten other states filed friend-of-the-court briefs supporting the case.
Under a program that began Jan. 1, states are required to send the federal government monthly payments to help cover the cost of prescription drugs for the elderly and disabled. That money was supposed to come from savings the states experienced because they no longer had to pay for drugs for people enrolled in Medicare and Medicaid.
A spokesman for the agency that oversees the Medicare program disputed the contention that states will lose money as a result of the new drug benefit. He said states will save an estimated $6 billion over the next 10 years, compared with what they would have paid under the old Medicaid system.
"As I understand it, every state was asked to participate in this lawsuit," said Gary Karr, spokesman for the Centers for Medicare and Medicaid Services. "The vast majority obviously did not."
Karr also noted that when Congress approved the prescription drug benefit in 2003, governors supported moving low-income elderly and disabled patients into the Medicare program for prescription drug coverage.
But Texas stands to lose about $100 million from 2006 to 2009, Abbott said, contending the new system "will have some states like Texas wallowing in red ink for several years."
New Jersey Attorney General Zulima V. Farber said program "takes us into uncharted waters as a nation," saying she could think of no other law requiring states to help fund a federal program.
In Kentucky, Attorney General Greg Stumbo estimated that the state will be saddled with payments to the federal government totaling more than $360 million over the next five years, for a net loss approaching $20 million.
Rather than helping seniors, the program is "failing our most vulnerable elderly and disabled citizens and it's failing the taxpayers of Kentucky," Stumbo said.
A 2003 law added a prescription benefit to Medicare, the federal health insurance program for the elderly and disabled. It went into effect Jan. 1 for those who signed up early and for millions who previously were covered by state Medicaid programs.