Tag: employer mandate

Washington Post: Adding Insult to Obamacare’s Injury

On Sunday, The Washington Post published my letter to the editor:

The excellent July 24 front-page article “Health law’s unintended impact on part-timers” showed how President Obama’s health-care law is cutting part-time workers’ pay by forcing employers to limit these employees’ hours in order to avoid penalties. Yet the reality is even worse.

Obamacare does not authorize those penalties in states that leave the task of establishing a health insurance exchange to the federal government. That means most of the employers the article cited — the commonwealth of Virginia, various Texas employers, the Ohio-based White Castle burger chain, the city of Dearborn, Mich., and Utah’s Granite School District — don’t need to cut part-timers’ hours, because the federal government has no authority to penalize them.

Yet the Obama administration has decreed it will do so anyway, contrary to the clear language of federal law, proving that taxation without representation is not confined to the District.

Two lawsuits have been filed to stop this illegal action — one by the state of Oklahoma, another by employers and individual taxpayers in Kansas, Missouri, Tennessee, Texas, Virginia and West Virginia.

Even so, thousands of part-time workers are already losing wages because of a tax Congress did not authorize. As underemployed music professor Kevin Pace told The Post, “This isn’t right on any level.”

Michael F. Cannon, Washington

The writer is director of health policy studies at the Cato Institute.

On Wednesday, July 31, a House oversight subcommittee will be holding a hearing on the IRS’s illegal taxes, borrowing, and spending.

Obama to Congress: Only I Can Amend ObamaCare

Today the House of Representatives will vote on two bills. One would codify President Obama’s unlawful one-year repeal of the employer mandate and the related reporting requirements. The second would do the same for the individual mandate, effectively delaying its start date until 2015 as well.

I was initially skeptical that these votes would do much to build support for reopening, delaying, or repealing ObamaCare. I wrote last week that they seemed designed mainly to help partisan Republicans build their House majority by “embarrass[ing] House Democrats by forcing them either to support relief for employers but not families or to break ranks with their president on Obamacare.” Two things have changed my mind.

First, if these bills were to pass, it appears the insurance industry would join the coalition demanding that Congress delay ObamaCare. The industry appears very afraid of delaying the individual mandate. An item in today’s Politico Pulse titled, “Would Mandate Delay Mess With Exchanges?” explains:

[A]n insurance industry official makes the case that delay of the individual mandate…would also mean delay of exchanges since all of the 2014 premiums were filed assuming the mandate would be in place. “If the mandate is delayed, the rates will need to be modified to reflect the likely impact on the risk pool,” the official said. “There is not enough time for plans to re-configure their bids, submit them to regulators for approval, and have those new bids reviewed and approved by the time open enrollment begins on October 1.”

Second, these votes have forced President Obama into an untenable position. Yesterday, he threatened to veto both bills. Think about that. President Obama has threatened to veto a bill that would codify his own policy of repealing the employer mandate for one year. He supports rewriting federal law – but only if he does it. Not if Congress does it.

I’d wager lots of congressional Democrats are pretty angry at President Obama today.

The individual mandate is ObamaCare’s least popular provision. Just 34 percent of Americans support it. Only 12 percent support letting it take effect while employers get a pass. When he unilaterally delayed the employer mandate, President Obama put House Democrats, and potentially Senate Democrats, in the position of having to cast their most unpopular pro-ObamaCare vote, ever. The attack ads practically write themselves. ”Congressman X voted against giving families the same breaks as big business.

On top of that, Obama’s threat to veto the bill codifying the employer-mandate delay marginalizes all of Congress, Democrats included. It also puts Democrats in an impossible situation. If Democrats vote against the president on the employer mandate – by voting for the bill codifying his policy (are you confused yet?) – then they are breaking ranks with their party’s leader. If they vote with the president – by voting against the bill codifying the president’s policy – they would be participating in their own marginalization.

All told, these votes appear to maximize the likelihood of exposing fissures among ObamaCare supporters. Maybe they will do more to wear down the opposition to reopening ObamaCare than I thought.

UPDATE: This post originally claimed that only 17 percent of Americans support the individual mandate. The actual figure in the poll cited was 34 percent, split evenly between “very favorable” and “somewhat favorable.” I regret the error, and thank Robert Dible for catching it.

Fourth Circuit’s Liberty Ruling Deals a Hidden Blow to Obamacare

Obamacare had a rough day in court yesterday. In Liberty University v. Lew, the Court of Appeals for the Fourth Circuit ruled against Liberty University’s challenge to various aspects of the law. One might think, as SCOTUSblog reported, this was a victory for the Obama administration. 

In the process, however, the Fourth Circuit undercut three arguments the administration hopes will derail two lawsuits that pose an even greater threat to Obamacare’s survival, Pruitt v. Sebelius and Halbig v. Sebelius

The plaintiffs in both Pruitt and Halbig claim, correctly, that Obamacare forbids the administration to issue the law’s “premium assistance tax credits” in the 34 states that have refused to establish a health insurance “exchange.” The Pruitt and Halbig plaintiffs further claim that the administration’s plans to issue those tax credits in those 34 states anyway, contrary to the statute, injures them in a number of ways. One of those injuries is that the illegal tax credits would subject the employer-plaintiffs to penalties under Obamacare’s employer mandate, from which they should be exempt. (The event that triggers penalties against an employer is when one of its workers receives a tax credit. If there are no tax credits, there can be no penalties. Therefore, under the statute, when those 34 states opted not to establish exchanges, they effectively exempted their employers from those penalties.)

The Obama administration has moved to dismiss Pruitt and Halbig on a number of grounds. First, it argues that those penalties are a tax, and the Anti-Injunction Act (AIA) prevents taxpayers from challenging the imposition of a tax before it is assessed. Second, the administration argues that the injuries claimed by the employer-plaintiffs are too speculative to establish standing. Third, shortly after announcing it would effectively repeal the employer penalties until 2015, the administration wrote the Liberty, Pruitt, and Halbig courts to argue that the delay should (at the very least) delay the courts’ consideration of those cases. In Liberty, the Fourth Circuit rejected all of those claims.

In discussing whether the “assessible payment” that the employer mandate imposes on non-compliant employers falls under the AIA, the court writes:

Obama Administration Tries to Use Its Illegal Delay of the Employer Mandate to Block Legal Challenges

Within hours of announcing its illegal decision to delay the employer mandate, the Obama administration on July 3 asked a federal court to block a legal challenge to the mandate, Liberty University v. Geithner, based on that delay. Today, the administration filed similar requests in Pruitt v. Sebelius and Halbig v. SebeliusThese actions confirm speculation that blocking these lawsuits—and especially Pruitt and Halbig—may have been the whole purpose of the delay.

I don’t have links yet, but the administration’s argument is weak and would not appear to impede any of the three cases. I hope to have more to say about this development soon. 

Yes, Delaying Obamacare’s Employer Mandate Is Illegal

Last week, when most Americans were starting their Fourth of July holiday, the Obama administration announced it will wait until 2015 to implement Obamacare’s penalties against employers who fail to offer “affordable” and “minimum value” coverage to their workers, rather than impose this “employer mandate” in 2014, as the statute requires. The administration’s stated rationale is that, despite nearly four years of lead time, it still won’t have the capacity to collect from employers the information required to determine which employers will be subject to penalties in 2014. As a result, the administration also announced it would not require employers to report that information until 2015, though (again) the statute requires employers to furnish that information in 2014.

Nicholas Bagley, a professor of law at the University of Michigan, suggests that maybe there is a legal rationale for the Obama administration’s delaying these provisions. So let’s take each provision in turn.

1) Has Congress given Treasury the authority to waive the penalties? The answer is no. The employer-mandate penalties unequivocally take effect on January 1, 2014, and the PPACA gives the Treasury secretary no authority to postpone their imposition.

Every element of the employer mandate demonstrates that it takes effect in 2014.

  • If any worker at a firm with more than 50 full-time-equivalent employees receives a tax credit through a health insurance “exchange,” then “there is hereby imposed on the employer an assessable payment.” Those tax credits become available on January 1, 2014. Thus that is also the date on which the penalties take effect.
  • The statute specifies penalty amounts that apply specifically in 2014, and provides that those penalties shall be adjusted for inflation in years after 2014.
  • The section creating the employer mandate even contains an effective date: “The amendments made by this section shall apply to months beginning after December 31, 2013.”

The statute gives the Treasury secretary the authority to collect these penalties “on an annual, monthly, or other periodic basis as the Secretary may prescribe.” It does not allow the secretary to waive the imposition of such penalties, except in one circumstance: Section 1332 authorizes the Treasury secretary to waive the employer mandate, but only as part of a state-specific waiver, and only if the state enacts a law that would provide equally comprehensive health insurance to as many residents, and only if that law would impose no additional cost to the federal government, and only if there is a “meaningful level of public input” over the waiver and its approval, and even then not until 2017. In other words, Congress spoke to the question of whether and when the executive should be able to waive the employer mandate, and Congress clearly did not want the administration to waive it unless certain specified conditions were met.

Nevertheless, Treasury claims it has the authority to waive those penalties without following Congress’ instructions: “[T]he employer shared responsibility payments…will not apply for 2014. Any employer shared responsibility payments will not apply until 2015.”

2) Has Congress given Treasury the authority to waive the reporting requirement? Again, the answer is no.

The PPACA added two sections to the Internal Revenue Code (sections 6055 & 6056) that require employers to report certain information on their health benefits and the workers who enroll in that coverage, in order to help the IRS determine whether those workers are eligible for tax credits and whether the employer is subject to penalties. Again, the statute is clear: those reporting requirements take effect in “calendar years beginning after 2013” and “periods beginning after December 31, 2013.” The statute contains no language authorizing Treasury to waive those requirements.

Bagley argues the statute does contain language that might enable Treasury to delay the imposition of these reporting requirements. Sections 6055 & 6056 state that employers must furnish this information “at such time as the Secretary may prescribe.” He writes, “Delaying the reporting requirements until 2015 is arguably just a specification of the ‘time’ at which the reports must be submitted.”

This theory reflects a misunderstanding of what an effective date is. When Congress imposes an obligation on some party, that obligation becomes effective on the effective date. The secretary’s discretion to prescribe the time at which the affected party must discharge that obligation neither affects the existence of the obligation, nor empowers the secretary to repeal it.

One might argue that Treasury has the authority to say employers need not report the required information regarding their 2014 health benefits offerings until, say, the next year, when they report the same information for their 2015 offerings. Yet that is not what Treasury is doing. Treasury claims it can altogether eliminate the obligation to report the 2014 information: “The Administration…will provide an additional year before the ACA mandatory employer and insurer reporting requirements begin.”

Moreover, if the language Bagley cites were interpreted to permit Treasury to waive the mandate and reporting requirements for 2014, is there any reason why that interpretation would not empower Treasury waive those provisions indefinitely? Could the secretary determine employers need discharge these obligations every 1,000 years? If not, why not?

Finally, Bagley concludes no one would have standing to challenge these actions in court. Thus even if the administration’s actions are illegal, he writes, “So what?”

Let’s assume for the moment that Bagley is correct on the standing issue. Here’s “what.” The law is a mutual compact between the government and the people. The more the government acts as though it is not bound by that the law, the more widespread will be the belief among the people that they are not bound by the law, either. That would be a very bad situation. There are already enough people out there who believe the government is not bound by the law that President Obama feels it is worth his time to counsel Americans to “reject these voices” – even as his actions lend credence to them, and further diminish respect for the law. That’s a “what” that I figured law professors understood.

Delay of ObamaCare’s Employer Mandate Shows How Nervous Feds Are about What Lies Ahead

Many have speculated that the Obama administration isn’t prepared to roll out ObamaCare. Some have speculated that even if the administration were prepared, the rollout would still be chaotic with job losses, rate shock, employer dumping, and the like. But since the Obama administration has been remarkably secretive about the status of its implementation efforts, no one has a better perspective on its preparedness, and the potential for chaos, than the administration itself. That’s why the decision to delay the implementation of ObamaCare’s employer mandate for one year is so illuminating.

Implementing the law without the employer mandate will definitely be very chaotic. (How can the federal government determine eligibility for the law’s subsidies if it doesn’t know whether workers received an offer of adequate coverage from an employer? Will the delay cause even more employers to drop coverage? Will it lead to some workers not receiving subsidies who otherwise would? Will employers’ and workers’ responses to the delay affect the risk profile of those who seek coverage through the exchanges? If so, how will that affect insurers, who have already filed their rates based on the assumption that the employer mandate would be in place? Will this delay lead to more delays, and ultimately to repeal? Will it increase political pressure for repeal of the individual mandate?) The whole purpose of the employer mandate was to reduce the economic and political upheaval that the rest of ObamaCare will unleash.

The decision to delay this mandate suggests that, from the Obama administration’s uniquely informed vantage point, the chaos that will result from its delay will be less than what would result from implementing it when the law requires. The administration doesn’t go around looking for ways to make implementation harder. This decision can only be understood as an effort to take the path of least resistance – and if this is the path of least resistance, then ObamaCare itself must be even more chaotic. This decision is the best window we have to see how nervous the administration is about what lies ahead.

Delaying the Employer Mandate Requires Delaying All of Obamacare

The IRS has announced it will postpone the start date of Obamacare’s “employer mandate” from 2014 to 2015. Most of the reaction has focused on how this move is an implicit acknowledgement that Obamacare is harmful, cannot work, and will prove a liability for Democrats going into the November 2014 elections. The Washington Post called the decision a “fresh setback” and a “significant interruption” to the law’s implementation. John McDonough, a prominent supporter of the law, observes, “You’ve given the employer community a sense of confidence that maybe they can kill this. If I were an employer, I would smell blood in the water.” When a die-hard Obamacare supporter like Ezra Klein says the employer mandate should be repealed, clearly things are not going well.

While all of this is true, it misses the two most significant implications of this momentous development:

First, the IRS’s unilateral decision to delay the employer mandate is the latest indication that we do not live under a Rule of Law, but under a Rule of Rulers who write and rewrite laws at whim, without legitimate authority, and otherwise compel behavior to suit their ends. Congress gave neither the IRS nor the president any authority to delay the imposition of the Patient Protection and Affordable Care Act’s employer mandate. In the section of the law creating that mandate, Congress included several provisions indicating the mandate will take effect in 2014. In case those provisions were not clear enough, Section 4980H further clarifies:

(d) EFFECTIVE DATE.—The amendments made by this section shall apply to months beginning after December 31, 2013.

It is hard to see how the will of the people’s elected representatives – including President Obama, who signed that effective date into law – could have been expressed more clearly, or how it could be clearer that the IRS has no legitimate power to delay the mandate. Again, Ezra Klein: “This is a regulatory end-run of the legislative process. The law says the mandate goes into effect in 2014, but the administration has decided to give it until 2015 by simply refusing to enforce the penalties.”