Tag: individual mandate

‘There Is No Such Thing as an Individual Mandate. It’s a Tax.’

That’s what Department of Justice attorney Joel McElvain said in open court last week. And thus the Obama administration reversed itself once again on whether the individual mandate is a tax. 

Relatedly, a Clinton-appointed federal judge has dealt a second blow to the IRS and the credibility of its defenders. He called one of the administration’s arguments ‘silly,’ and promised expedited consideration of the Obamacare challenge, Halbig v. Sebelius. Read all about these in my latest Darwin’s Fool post at Forbes.com.

Halbig Plaintiffs Request Preliminary Injunction

Halbig v. Sebelius is one of two federal lawsuits challenging an illegal IRS rule that attempts to issue ObamaCare’s tax credits in the 34 states that have opted not to establish one of the law’s health insurance “exchanges.” Yesterday, attorneys for the Halbig plaintiffs filed a motion for a preliminary injunction, requested a hearing on that motion before October 1, and filed a second motion also seeking to expedite the case. The first motion requests:

an Order enjoining [the government], pending resolution of the litigation, from applying the IRS regulations extending eligibility for premium assistance subsidies under the Patient Protection and Affordable Care Act to individuals who purchase health coverage through Exchanges established by the federal government.

If the court grants that request, ObamaCare implementation will come to a screeching halt.

The Halbig plaintiffs make a compelling case that the IRS is violating federal law, and that the court must resolve the issue before January 1, 2014. If a resolution comes after that date, the plaintiffs will be irreparably injured because they “will be forced either to comply with the ACA’s individual mandate or risk incurring a penalty, and…will further be entirely and forever precluded from purchasing catastrophic coverage for 2014.” In addition: 

the balance of the equities and public interest both cut strongly in favor of resolving the legal validity of the IRS Rule now, before billions of taxpayer dollars are illegally expended and before employers make unalterable benefit decisions premised on the Rule. If a ruling invalidating the IRS Rule is delayed until after these events, the result would be utter chaos…It serves everyone’s interests—those of Plaintiffs, the Government, and the public alike—to obtain a prompt ruling on the legal validity of the IRS Rule, so that there will be no need subsequently to confront the logistical nightmare of trying to unscramble and undo the unlawful expenditure of billions of federal dollars. [Emphasis in original.]

Even if the government ultimately prevails, as health-benefits expert Thomas Haynes explains in a supplemental filing, it would unnecessarily and irreparably injure some employers and employees if that happens in 2014 instead of 2013. Brokers who are aware that the availability of these tax credits is uncertain in 34 states will counsel employers not to adjust their employee benefits to take advantage of that still-uncertain new landscape. Those employers and employees would then be locked into spending more on health insurance in 2014 than they would if the litigation had been resolved in 2013. 

The Obama administration, however, is in no hurry. In Halbig, for example, government lawyers have blown through the legal deadlines for responding to key plaintiff motions, deadlines that passed months ago. Indeed, they appear to be using every tactic at their disposal to guarantee these cases will not be resolved this year.

Whether the Obama administration’s lawyers simply have a lot on their plate, or are intentionally trying to prejudice judges against ruling for the plaintiffs – by guaranteeing that such a ruling would result in maximum chaos – a preliminary injunction is in order. 

Big Business Gets Yet Another Obamacare Delay That Individuals Don’t

“I didn’t simply choose to delay this on my own,” President Obama reassured the nation about his unilateral decision to delay Obamacare’s employer mandate. “This was in consultation with businesses all across the country,” he said, as if that made the situation better instead of worse. Obama threw his “consultants” another bone when he decided to delay the reporting requirements the law imposes on employers, also until 2015. The president’s generosity toward large corporations will be financed by the American taxpayer. The Congressional Budget Office projects these delays will cost taxpayers another $3 billion in new government spending and reduce federal revenues by $9 billion, for a total increase in the federal debt of $12 billion. Yet the president fails to show the same concern for individual taxpayers. When the House of Representatives, including dozens of Democrats, voted to extend the same break to individuals by delaying Obamacare’s individual mandate by one year, President Obama threatened to veto that bill. Bizarrely, he also threatened to veto another bill (approved by an even broader bipartisan majority) that would make legal his illegal delay of the employer mandate.

So perhaps we should not be too surprised now that the New York Times reveals yet another delay the president approved at the behest of big business:

In another setback for President Obama’s health care initiative, the administration has delayed until 2015 a significant consumer protection in the law that limits how much people may have to spend on their own health care.

The limit on out-of-pocket costs, including deductibles and co-payments, was not supposed to exceed $6,350 for an individual and $12,700 for a family. But under a little-noticed ruling, federal officials have granted a one-year grace period to some insurers, allowing them to set higher limits, or no limit at all on some costs, in 2014…

[F]ederal officials said that many insurers and employers needed more time to comply because they used separate companies to help administer major medical coverage and drug benefits, with separate limits on out-of-pocket costs…

A senior administration official, speaking on condition of anonymity to discuss internal deliberations, said: “We knew this was an important issue. We had to balance the interests of consumers with the concerns of health plan sponsors and carriers, which told us that their computer systems were not set up to aggregate all of a person’s out-of-pocket costs. They asked for more time to comply.”…

Theodore M. Thompson, a vice president of the National Multiple Sclerosis Society, said: “The promise of out-of-pocket limits was one of the main reasons we supported health care reform. So we are disappointed that some plans will be allowed to have multiple out-of-pocket limits in 2014.”

It is a sign of Obamacare’s complexity that the Obama administration felt it needed to issue this delay. It is a further sign of the law’s complexity that this delay was announced in February, yet is only coming to light now.

Guess Who’s One of the Hill’s ‘100 People to Watch This Fall’

I guess I’ll have to tout this myself. Last week, the Hill newspaper put me on its list of “the 100 people you can’t ignore this fall if you’re wondering how events in Congress and the White House will play out.” Here’s the write-up

Michael Cannon Director of health policy studies at the Cato Institute
 
Think the Supreme Court has settled the question of ObamaCare’s legality? Not if Cannon has anything to say about it. Cannon is a tireless advocate for the argument that the IRS has illegally implemented the healthcare law’s insurance subsidies, which will help low-income households cover the cost of their premiums. 
 
His argument is that healthcare law, as written, does not allow for the subsidies to be used in healthcare marketplaces that are set up by the federal government.
 
He helped the state of Oklahoma file a lawsuit against the subsidies, and a group of small businesses filed a separate suit on the same grounds, in case Cannon’s runs into procedural roadblocks.
 
If the lawsuits Cannon has spearheaded are successful, they could have a devastating impact on the healthcare law. A final decision in favor would stop the flow of tax subsidies to people in more than half of the states, making ObamaCare far less attractive to consumers and stripping away much of the law’s promise of affordability.

Corrections and amplifications. The argument is as much Jonathan Adler’s as mine; we develop it together in this law-journal article. The argument is not that the IRS is illegally implementing otherwise lawful subsidies; it is that the IRS is trying to dispense some $700 billion in illegal subsidies that Congress expressly did not authorize, and impose illegal taxes on millions of employers and individual Americans starting in 2014; that the Obama administration is attempting to tax, borrow, and spend nearly $1 trillion without congressional authorization. Finally, I am neither a party nor counsel nor financier to either Pruitt v. Sebelius or Halbig v. Sebelius.

Harvard Health Policy Review on the IRS’s Illegal ObamaCare Taxes

In the just-released Spring 2013 issue of Harvard Health Policy Review, I have an article titled “ObamaCare: The Plot Thickens.” The article examines the IRS rule that purportedly implements ObamaCare’s tax credits, but actually violates that statute by taxing, borrowing, and spending hundreds of billions of dollars contrary to Congress’ explicit instructions. (The article is a less-technical version of my Health Matrix article (coauthored with Jonathan Adler), “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA.”) Here’s an excerpt:

In broad daylight, the Internal Revenue Service is attempting to tax, borrow, and spend [roughly] $800 billion—contrary to both the express language of the PPACA and congressional intent. Thus in addition to other abuses that have recently come to light, the IRS is attempting to tax millions of employers and individuals without congressional authorization…

In this still-unfolding narrative, the Obama administration’s actions are triply anti-democratic. First, the IRS is violating a direct constraint that popularly elected legislators placed on the executive branch. Second, it is violating that duly enacted statute for the purpose of denying popularly elected state officials the vetoes Congress gave them over certain provisions of the statute. And third, it is violating the statute because administration officials either cannot fathom or will not accept that Congress meant to do what it clearly did.

Obama administration officials continually emphasize that the PPACA is “the law of the land.” That remains to be seen, in more ways than one.

Obamacare: House Hearing on the IRS’s Illegal Taxing, Borrowing & Spending

As Jonathan Adler and I detail in our Health Matrix article, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA,” the Obama administration is attempting to rescue Obamacare from oblivion by literally taxing, borrowing, and spending more than $700 billion without congressional authorization. In a recent letter to the editor of the Washington Post, I explain how these illegal taxes are already hurting workers. 

On July 25, chairmen of the House Ways & Means Committee, the House Committee on Oversight & Government Reform, and two Oversight subcommittees sent a letter to Treasury Secretary Jacob Lew demanding information related to the illegal tax-credit rule.

The House Oversight Subcommittee on Health Care has announced it will hold a hearing this Wednesday, July 31, on the IRS’s illegal tax-credit rule titled, “Oversight of IRS’s Legal Basis for Expanding ObamaCare’s Taxes and Subsidies.” Adler will testify alongside Oklahoma Attorney General Scott Pruitt and Missouri physician and small business owners Charles Willey, each of whom has filed suit to block the IRS’s illegal rule. 

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.