Featuring Benjamin H. Friedman, Research Fellow in Defense and Homeland Security Studies, Cato Institute; Spencer Ackerman, Senior Writer, WIRED Magazine; and Julian Sanchez, Research Fellow, Cato Institute; moderated by Laura Odato, Director of Government Affairs, Cato Institute.
We are grateful to the Harry and Lynde Bradley Foundation and the Carthage Foundation whose support of the October 2012 Cato Conference “Europe’s Crisis and the Welfare State: Lessons for the United States” made possible this special issue of the Cato Journal.
The Iowa legislature’s unanimous decision to expand its scholarship tax credit program demonstrates that school choice grows even more popular once implemented.
Renowned development economist Deepak Lal draws on 50 years of experience around the globe to describe developing-country realities and rectify misguided notions about economic progress.
The Cato Institute tops a new measure of think tank performance in the United States, according to a recent report. Cato bested all other U.S. think tanks in the main category of “Aggregate Profile per Dollar Spent.” “I’m grateful to the Center for Global Development for showing that Cato gives its sponsors something I wish government gave more of to taxpayers: bang for the buck,” said Cato CEO John Allison.
An article in the current issue of Business Insurance cites a couple of experts on the potential impact of the lawsuit:
While the ramifications of the suit pending in the U.S. District Court in Muskogee, Okla., are huge, the challenge brought last month has gotten little attention…
What is clear is that the outcome of the lawsuit could be crucial for the future of the health care reform law, observers said.
If premium subsidies are not available in federally established exchanges, “No one would go to those exchanges. The whole structure created by the health care reform law starts to fall apart,” said Gretchen Young, senior vice president-health policy at the ERISA Industry Committee in Washington.
“The health care reform law would become a meaningless law,” added Chantel Sheaks, a principal with Buck Consultants L.L.C. in Washington.
California is one of the few states charging ahead on establishing one of ObamaCare’s health insurance “exchanges.” According to the Los Angeles Times:
California insurance officials have expressed concern about substantial rate hikes for some existing policyholders going into the exchange.
Under a new rating map approved by state lawmakers, the Department of lnsurance estimated that premiums for similar coverage could increase as much as 25% in West Los Angeles, 22% in the Sacramento area and nearly 13% in Orange County.
California officials have floated the idea of legislating lower prices. One way would be to throw West Los Angeles and Orange County into the same risk pools. That might reduce premiums in West L.A., but only by increasing premiums in Orange County. With a few simplifying assumptions, premiums in both West L.A. and the O.C. could rise by 19 percent. An alternative would be to cap premium increases. One state official proposes a cap of 8 percent. But that would just be an implicit form of government rationing. If insurers cannot charge premiums that cover their costs, they will cover fewer services.
If Oklahoma prevails in its lawsuit against the IRS, or if any similar plaintiffs prevail, California will look pretty silly for charging forward with an Exchange. California will have imposed on its employers an unnecessary tax of $2,000 per worker – a tax that California employers can avoid by relocating to states that have not created an Exchange. It will also have unnecessarily exposed 2.6 million California residents to ObamaCare’s individual mandate – i.e., a tax of $2,085 on families of four earning as little as $24,000 per year, which those residents can likewise avoid by relocating to another state.
The argument about Obamacare is often framed as a moral issue. It’s the caring and compassionate against the cruel and heartless. That’s the rhetoric; the reality is different. Many of us who oppose Obamacare don’t do so because we enjoy seeing people suffer. We believe that, in an ideal world, everyone would have insurance. But we also think that Obamacare has huge drawbacks that outweigh its plausible benefits.
It creates powerful pressures against companies hiring full-time workers — precisely the wrong approach after the worst economic slump since the Depression. There will be more bewildering regulations, more regulatory uncertainties, more unintended side effects and more disappointments. A costly and opaque system will become more so.
At a packed Cato Institute briefing on Capitol Hill yesterday, Jonathan Adler and I debated ObamaCare expert Timothy Jost over an admittedly wonky issue that nevertheless could determine the fate of ObamaCare: whether Congress authorized the IRS to subsidize health insurers, and to tax employers and certain individuals, in states that refuse to establish one of ObamaCare’s health insurance “exchanges.”
I want you, dear Cato@Liberty readers, to help us get to the bottom of it.
Adler and I claim that Congress specifically, repeatedly, and unambiguously precluded the IRS from imposing those taxes or issuing those subsidies through federal “fallback” Exchanges. We maintain the below video shows ObamaCare’s chief sponsor and lead author–Senate Finance Committee chairman Max Baucus (D-MT)–admitting it. Jost says Baucus’s comments have “absolutely nothing” to do with the matter. You be the judge, and tell us what you think.
A bit of background will help to frame what’s happening in the video: Both sides agree this issue hinges on whether the statute authorizes “premium assistance tax credits” through both state-created and federal Exchanges, or only state-created Exchanges. The video is from a September 23, 2009, Finance Committee markup of ObamaCare. In it, Baucus rules out of order a Republican amendment on the grounds that medical malpractice lies outside the committee’s jurisdiction. Sensing a double-standard, Sen. John Ensign (R-NV) notes that Baucus’s underlying bill directs states to change their health insurance laws and to establish Exchanges, matters which also lie outside the Finance Committee’s jurisdiction, and asks why aren’t those provisions also out of order. Okay, go.
I might note that these are the only comments anyone has unearthed from ObamaCare’s legislative history that bear directly on the question of whether Congress intended to authorize tax credits in federal Exchanges.
Baucus’s response is hardly a model of clarity. But I can see no possible interpretation other than Baucus is admitting that (A) the statute makes tax credits conditional on states establishing an Exchange, and therefore does not authorize tax credits through federal Exchanges, and (B) that this feature was essential for the Senate’s tax-writing committee to have jurisdiction to legislate in the area of health insurance.
But maybe I’m wrong. What do you think Baucus is saying? Since we don’t enable comments on Cato@Liberty, post your interpretation here on the Anti-Universal Coverage Club’s Facebook page. Or post it on your own blog and send me a link.
During oral arguments in the Supreme Court challenge to the individual mandate, NFIB v. Sebelius, the plaintiff’s lawyer Paul Clement warned the justices not to make the same mistake they made in the 1970s with Buckley v. Valeo. In Buckley,the Court upheld portions of the post-Watergate campaign-finance reforms while invalidating others. The result was a muddled statute that Congress and the courts would repeatedly revisit for years to come. Repeating this approach with the Patient Protection and Affordable Care Act, Clement cautioned, could produce similar undesirable results. It’s too soon to know how quickly Congress will revisit the PPACA, but Clement’s warning already seems to be coming true in the courts…
More than three months after the Court’s decision, over three dozen legal challenges to the PPACA or its implementation are pending in federal courts, and more are sure to come.
More than 150 local employers have written a letter to the District’s ObamaCare board, protesting the destruction of D.C.’s individual and small-group health insurance markets:
Those of us who may have had doubts about the health reform law were comforted by President Obama’s repeated assurances that, “If you like your health plan…you will be able to keep your health care plan. Period.” But, by dismantling and recasting the separate health insurance marketplaces that serve small employer groups and individuals in the District, D.C. policymakers would take away the option of keeping the health plan that they now have. Rather, to continue to offer health benefits to employees after 2013, small employers like us would have no choice but to go to an undefined, untested, more expensive entity to obtain coverage. Especially in these uncertain economic times, many employers, and their workers, must be given the time to adjust their budgets for the estimated price increases of the Exchange. In addition, many of us have long-established relationships with health insurers we know and are guided by broker advisors who understand our unique needs. We do not want to be forced to buy the standardized, cookie-cutter coverage that would be offered through a government-run Exchange…
Indeed, forcing all consumers seeking Individual or Small Group health coverage to go to the Exchange to purchase health plans runs counter to the ACA’s essential promise of more – not less – choice…The diversity of small employer health plans currently available in the District cannot be replicated in the standardized plans offered by the Exchange. Small employers rely on choice amongst a wide array of health plans available in the current commercial marketplace and the flexibility to design contributions to complement each employer’s unique budgetary and financial situations…With the many changes that will be required of employers of all sizes under the new federal health care reform law, it seems unreasonable to add to those concerns by eliminating the commercial marketplace which we know for an undefined, unfamiliar and untested Exchange-driven marketplace.
In addition, we cannot ignore the significant costs of administering the Exchange which will undermine one of the key goals of the federal law - affordability.
Signatories include such notorious right-wing groups as the Brady Center To Prevent Gun Violence:
ACDI/VOCA
AIDS United
Allen & Associates
Alliance Insurance Services
American Academy of Orthotists & Prosthetists
American Association for Clinical Chemistry, Inc.
American Bakers Association
American Cleaning Institute
American Council for an Energy-Efficient Economy
American Immigration Lawyers Association
American Insurance Association
American Road & Transportation Builders Association
American Society of Association Executives
Andre Chreky, the salon spa
Apartment and Office Building Association of Metropolitan Washington
Ashcraft & Gerel LLP
Association for Competitive Technology
Association for Professionals in Infection Control and Epidemiology
Axar Management
Beacon Consulting Group, Inc.
Blue House Design
Bogart
Brady Campaign and Brady Center To Prevent Gun Violence
Brawner Management, LLC
Building Owners and Managers Association International
Capital Medical Associates
Center for Constitutional Litigation, P.C.
Center for Nonprofit Advancement
CGH Technologies, Inc.
Chef Geoff’s
Columbia Lighthouse for the Blind
Combined Properties, Incorporated
Communications Development
Consortium of Universities of the Washington Metropolitan Area
David All Group
DC Chamber of Commerce
Development Gateway, Inc.
Distilled Spirits Council
Elizabeth M. Ross and Kenneth M.H. Lee, M.D., P.C.
Entertainment Software Association
Environmental Law Institute
EOP Group, Inc.
Euroconsultants, Inc.
Federation of American Hospitals
Good Neighbors, LLC
Government Accountability Project
Hemsley Fraser Group
High Noon Communications
History Matters
Howard Eales, Inc.
Howard W. Phillips & Co.
ICI Mutual Insurance Company
Innovators Network Foundation
Interstate Natural Gas Association of America
J. Todd Miller & Associates, Inc.
Kaludis Consulting Group, Inc.
Katz, Marshall & Banks LLP
Knightsbridge Restaurant Group
LEVICK
LimeLeap Solutions
Marvin A. Address & Associates, Inc.
McBride Real Estate
McClendon Center
MCLA Inc.
Metro TeenAIDS
Metropolitan Washington Road & Transportation Builders
Miller & Shook Companies
National Association for Gifted Children
National Association of Health Underwriters
National Association of Regulatory Utility Commissioners
National Association of State Departments of Agriculture
National Council for Interior Design Qualification
National Customs Brokers & Forwarders Association
National Mining Association
National Propane Gas Association
Navista, Inc.
NetChoice
Pacific Cargoes
Park Limited
Passion Food Hospitality
Promundo-US
Radio Television Digital News Association / Foundation
Regis & Asociates, PC
Reiter & Hill
Restaurant Association Metropolitan Washington
RULG-Ukranian Legal Group, P.A.
Sabin Vaccine Institute
Society of Chemical Manufacturers & Affiliates
Spiegel & McDiarmid LLP
The Council for Responsible Nutrition
The Episcopal Center for Children
The Farm Credit Council
The Ford Agency, Inc.
The Gabriel Company, LLC
The Prime Rib, Inc.
Timothy A. Price, MD, PC
Triad Communication / TRC Real Estate
U.S. Grains Council
U.S. Soccer Foundation
United Fresh Produce Association
Vinyl Siding Institute, Inc.
Vogel, Slade & Goldstein, LLP
Waterman and Associates
Wenderoth, Lind & Ponack, L.L.P.
Widmeyer Communications
Appleseed Foundation
Atelier Architects
Bockorny Group
Bond & Pecaro
Bonner, Kiernan, Trebach & Crociata
Bonstra Haresign Architects
Capitol Process Services, Inc.
Carr Workplaces
Casey Trees
Clement’s Pastry Shop
Communications Development Incorporated
Computer World Services
Colonnade Condos
Compressus
Environmental Design & Construction
The Fund for American Studies
Fund for Global Human Rights
Futures Industry Association
Hartman-Cox Architects
Hecht, Spencer and Associates
The Herald Group
I. Gorman Jewelers
International Center for Research on Women
International Dairy Foods Association
International Franchise Association
James E. Brown & Associates, PLLC
Jewish Primary Day School of the Nation’s Capital
Jewish Women International
King Branson LLC
Land Trust Alliance
Law Resources
MAG America
Man-Machine Systems Assessment, Inc.
McBee Strategic
McBride Real Estate Services
Medical Device Manufacturers Association
Medical Society of the District of Columbia
Metropolitan Engineering, Inc. | Shapiro – O’Brien
National Institute of Building Sciences
North American Millers’ Association
North American Securities Administrators Association
Pascal & Weiss, P.C.
Poker Players Alliance
Potomac Communications Group, Inc.
Public Properties
Rust Insurance Agency, LLC
Safety Net Hospitals for Pharmaceutical Access
Salsa Labs
Society of the Plastics Industry
Springboard Enterprises
Theodore Roosevelt Conservation Partnership
The Washington Center for Internships and Academic Seminars
Washington Partners, LLC
One might add the Center for Science in the Public Interest, whose president emeritus complains, “the only option the board publicly considered has been this unpopular and unnecessary plan to close the private marketplace to many businesses.”
Secretary of Health and Human Services Kathleen Sebelius has been campaigning so enthusiastically for President Obama that she – whoops! – broke a federal law that restricts political activities by executive-branch officials. Federal employees are usually fired for such transgressions, but no one expects that to happen to Sebelius. Heck, she got right back in the saddle.
Every cabinet official (probably) wants to see the president reelected, and no president relishes dismissing a cabinet official. But in this case, there’s an additional incentive for Sebelius to campaign for her boss and for Obama not to fire her.
ObamaCare creates a new Independent Payment Advisory Board that – “fact checkers” notwithstanding – is actually a super-legislature with the power to ration care to everyone, increase taxes, impose conditions on federal grants to states, and wield other legislative powers. According to legend, IPAB will consist of 15 unelected “experts” who are appointed by the president and confirmed by the Senate. Yeah, good one.
In fact, if the president makes no appointments, or the Senate rejects the president’s appointees, then all of IPAB’s considerable powers fall to one person: the Secretary of Health and Human Services. The HHS secretary would effectively become an economic dictator, with more power over the health care sector than any chamber of Congress.
If Obama wins in November, he would have zero incentive to appoint any IPAB members. The confirmation hearings would be a bloodbath, not unlike Don Berwick’s confirmation battle multiplied by 15. Sebelius, on the other hand, would not need to be re-confirmed. She could assume all of IPAB’s powers without the Senate examining her fitness to wield those powers. If Obama fired her, or the voters fire Obama, then the next HHS secretary would have to secure Senate confirmation. Again, bloodbath. That makes Kathleen Sebelius the only person in the universe who could assume those powers without that scrutiny.
No wonder she’s campaigning so hard. No wonder Obama won’t fire her.
Oklahoma Attorney General Scott Pruitt has filed a lawsuit challenging the Internal Revenue Service’s unlawful attempt to impose ObamaCare’s taxes on exempt employers and individuals. (Jonathan Adler and I plumb this issue in our forthcoming Health Matrix article, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA.”)