Tag: individual mandate

I Have Been False*

*According to PolitiFact.

In an unconscious parody of everything that’s wrong with the “fact-checker” movement in journalism, PolitiFact Georgia (a project of the Atlanta Journal-Constitution) has rated false my claim that operating an ObamaCare Exchange would violate Georgia law. (For some of the “fact-checker” genre’s greatest worst hits, see Ben Domenech’s top 10 list.)

PolitiFact’s analysis is one-sided. It confuses opinions with facts. It was written with “no particular policy domain knowledge.” It therefore not only reaches the wrong result – it analyzes a claim I did not make and never would make.

PolitiFact began by saying that it was fact-checking the following claim, which I made in a November 9 opinion piece at National Review Online:

[O]perating an Obamacare exchange would be illegal in 14 states. Alabama, Arizona, Georgia, Idaho, Indiana, Kansas, Louisiana, Missouri, Montana, Ohio, Oklahoma, Tennessee, Utah, and Virginia have enacted either statutes or constitutional amendments (or both) forbidding state employees to participate in an essential exchange function: implementing Obamacare’s individual and employer mandates.

Lest anyone think I meant it would be illegal for the federal government to operate Exchanges in those states, the context and the text (“forbidding state employees”) of that opinion piece make it clear I was discussing whether states should establish Exchanges. Unfortunately, the context was lost on PolitiFact readers, because PolitiFact provided neither a citation nor a link to the opinion piece it was fact-checking.

In Georgia’s case, the relevant statute is that state’s version of the “Health Care Freedom Act” (GA. CODE ANN. § 31-1-11), enacted in 2010. It reads:

To preserve the freedom of citizens of this state to provide for their health care: No law or rule or regulation shall compel, directly or indirectly, any person, employer, or health care provider to participate in any health care system.

The statute defines “compel” as including “ ‘penalties or fines.”

PolitiFact notes that I cited that provision to “an Atlanta Journal-Constitution health reporter [Carrie Teegardin] via email.” Thus PolitiFact presumably had access to the rest of my November 9 email to Teegardin, in which I explained why that provision precludes Georgia from establishing an ObamaCare Exchange:

Determining eligibility for and distributing ObamaCare’s “premium assistance tax credits” is a key function of an Exchange. Those tax credits trigger penalties against employers (under the employer mandate) and residents (under the individual mandate).

Indeed, there are many ways Exchanges assist the federal government in the enforcement of those mandates. State-run Exchanges must report to the IRS on which residents have dropped their coverage and when (Section 1311(d)(4)(I)). State-run Exchanges must notify employers when one of their employees receives a tax credit  (Section 1411(e)(4)(B)(iii)). That very notification triggers penalties against the employer (Section 1513/I.R.C. Section 4980H(a)). State-run Exchanges must collect all the information the federal government needs to determine eligibility for tax credits and deliver it to the federal government (Section 1401/I.R.C. Section 36B(f)(3)) – a crucial component of enforcing both the individual and employer mandates. The  Secretary can require state-run Exchanges to verify that information for the federal government (Section 1411(d)), and state-run Exchanges must resolve any inconsistencies between the information provided by applicants and official records (Section 1411(e)). If a state-run Exchange can’t resolve an inconsistency between the application and the official records within a certain time period, it has to notify residents that they will be penalized under the individual mandate (Section 1411(e)(4)(B)(iv)). State-run Exchanges must maintain an appeals process for individuals and employers who believe they were wrongly assessed penalties (Section 1411(f)).

My email to Teegardin continued:

Ergo, if Georgia establishes an Exchange, then a Georgia law and state employees would be indirectly compelling employers and residents to participate in a health care system.

In other words, the activities required of an ObamaCare Exchange are exactly the sorts of things that the Health Care Freedom Acts in Georgia and 13 other states exist to prohibit those states’ employees from doing. In a November 15 opinion piece Atlanta Journal-Constitution, no less, I reiterated that same point: legislatures and voters in those 14 states have enacted state laws that make it illegal (and in some cases unconstitutional) for state employees to operate an ObamaCare Exchange.

Rather than evaluate that claim, PolitiFact asked a handful of Georgia scholars about something completely different: whether Georgia’s Health Care Freedom Act prevents the federal government from creating an Exchange for Georgia, or otherwise trumps federal law. It’s difficult to see how anyone who had read my two opinion pieces, much less my email to Teegardin, could think I was saying anything of the sort. Of course such a claim would be false; that’s why I never made it. (ObamaCare does itself give each state the power to stop the federal government from running an Exchange within its borders. But that’s a topic for another day.)

Then again, I could have set them straight. PolitiFact contacted me for help with this “fact-check.” I politely refused, citing my ongoing boycott of their organization. One might say my refusal to assist with this “fact-check” means I have no right to complain.

Another way of looking at it is that this episode validates my boycott. Consider how they responded to my refusal to help: Cannon won’t speak to us because he says we’re not reputable. Should we try to find someone else who might argue his side? Nah. PolitiFact could have proven me wrong by conducting a thorough analysis. Off the top of my head, I can think of seven other experts they might have consulted. A simple online search would have produced two attorneys who have threatened to sue the State of Arizona under the Health Care Freedom Amendment to its Constitution if state officials establish an Exchange. Instead, PolitiFact considered a discussion of my email auto-signature – “Tyrannis delenda est” – more worthy of inclusion in their “fact-check” than another expert who would take up my side.

My boycott of PolitiFact hasn’t succeeded in bringing about the desired behavior change. But if they keep this up, I don’t see how I can fail.

The IRS’s Illegal ObamaCare Taxes, Bagenstos Edition

As I posted a week ago today, Jonathan Adler and I have a paper titled, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA.” Our central claims are:

  1. The Patient Protection and Affordable Care Act explicitly restricts its “premium-assistance tax credits” (and thus the “cost-sharing subsidies” and employer- and individual-mandate penalties those tax credits trigger) to health insurance “exchanges” established by states;
  2. The IRS has no authority to offer those entitlements or impose those taxes in states that opt not to create Exchanges; and
  3. The IRS’s ongoing attempt to impose those taxes and issue those entitlements through Exchanges established by the federal government is contrary to congressional intent and the clear language of the Act.

We hope to post an updated draft of our paper, with lots of new material, soon.

At the Disability Law blog and Balkinization, University of Michigan law professor Samuel Bagenstos writes that our claims are “deeply legally flawed.”

Like others before him, Bagenstos’s main argument in support of the IRS reduces to the absurd claim that the federal government can establish an Exchange that is established by a state. He also offers two new arguments. Each is a non sequitur, and like his main argument is contradicted by the express language of the statute.

As I have written before:

[T]he statute is crystal clear. It explicitly and laboriously restricts tax credits to those who buy health insurance in Exchanges “established by the State under section 1311.” There is no parallel language – none whatsoever – granting eligibility through Exchanges established by the federal government (section 1321).

(Bagenstos claims the statute’s tax-credit-eligibility provisions use the phrase “established by the State under section 1311” only twice. He neglects to mention: how the eligibility provisions refer to those limiting phrases an additional five times; that there is no language contradicting or creating any ambiguity about the limitation they create; and that the statute also restricts its “cost-sharing subsidies” to situations where “a credit is allowed” under those eligibility rules. At the risk of repeating myself, the eligibility rules for the credits and subsidies are so tightly worded, they seem designed to prevent precisely what the IRS is trying to do.)

Bagenstos correctly notes that Section 1321 directs the federal government to create Exchanges within states that fail to create their own. Like others before him, he takes that directive to mean that the phrase “established by the State under section 1311” in fact ”does not have the exclusionary meaning” you might think. The statute authorizes tax credits through federal Exchanges, he argues, because federal Exchanges are ”established by the State under section 1311.” The federal government, it turns out, can establish an Exchange that is established by a state.

Like others before him, Bagenstos finesses the absurdity of that claim by arguing that Section 1321 provides that a federal Exchange ”will stand in the shoes of a state-operated exchange.” So far as I can tell, the “stand in the shoes” trope was first advanced by Judy Solomon of the Center for Budget and Policy Priorities. It is based on a 180-degree misreading of Section 1321. If a state chooses not to dance, Section 1321 doesn’t instruct the federal government to step inside (read: commandeer) the state’s dancing shoes. It directs the federal government put on its own dancing shoes, and to follow all the dance steps listed in Title I. Since the language restricting tax credits to state-created Exchanges appears in—you guessed it—Title I, federal Exchanges are bound by that restriction.

Bagenstos’s second argument is that since it was not necessary for Congress to restrict tax credits to state-created Exchanges to overcome the “commandeering problem,” the statute does not do so. But that’s a non sequitur. Just because Congress didn’t have to do something doesn’t mean Congress didn’t do it. The express language of the statute says Congress did it.

Bagenstos’s third argument is that because the Senate Finance Committee didn’t have to restrict tax credits to state-created Exchanges in order to have jurisdiction to direct states to create them, the Committee-approved language—which is now law—must not do so. Again, that’s a non sequitur. And not only does the express language of the statute impose that restriction, but Senate Finance Committee chairman Max Baucus (D-MT) admitted that’s what he was doing.

Along the way, Bagenstos contradicts himself, Baucus, and Timothy Jost by categorically claiming, “Nor is there any reason to think that Congress would have intended to treat participants in state- and federally-operated exchanges differently,” while conceding the commandeering problem and the Finance Committee’s limited jurisdiction are two reasons why Congress might have intended to do so.

Bagenstos’s interpretation of the statute violates the “mere surplusage” canon of statutory interpretation. It violates the expressio unius est exclusio alterius canon of statutory interpretation. It violates common sense.

Like others before him, Bagenstos offers no rebuttal to Baucus’s admission that the  statute means exactly what it says, and nothing whatsoever from the legislative history that supports the IRS’s attempt to violate the express language of the statute by imposing taxes that Congress never authorized.

Why ‘Obamacare’s Critics Refuse to Give Up’

Jonathan Adler and I have a paper titled, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA.” Our central claims are:

  1. The Patient Protection and Affordable Care Act explicitly restricts its “premium-assistance tax credits” (and thus the “cost-sharing subsidies” and employer- and individual-mandate penalties those tax credits trigger) to health insurance “exchanges” established by states;
  2. The IRS has no authority to offer those entitlements or impose those taxes in states that opt not to create Exchanges; and
  3. The IRS’s ongoing attempt to impose those taxes and issue those entitlements through Exchanges established by the federal government is contrary to congressional intent and the clear language of the Act.

Over at The New Republic’s blog The Plank, my friend Jonathan Cohn says this is “preposterous”:

No sentient being following the health care debate could argue, in good faith, that Obamacare’s architects intended for the federal government to set up exchanges without subsidies. It would completely subvert the law’s intent.

It appears my friend does not know the statute, the legislative history, or what Congress’ intent was.

Cohn writes that the statute is “a little fuzzy” on this issue. Quite the contrary: the statute is crystal clear. It explicitly and laboriously restricts tax credits to those who buy health insurance in Exchanges “established by the State under section 1311.” There is no parallel language – none whatsoever – granting eligibility through Exchanges established by the federal government (section 1321). The tax-credit eligibility rules are so tightly worded, they seem designed to prevent precisely what the IRS is trying to do.

ObamaCare supporters just know that can’t be right. It must have been an oversight. Congress could not have written the law that way. It doesn’t make any sense. Those provisions must take effect in federal Exchanges for the law to work. Why would Congress give states the power to blow the whole thing up??

The answer is that Congress didn’t have any choice. Congress intended for ObamaCare to work this way because this was the only way that ObamaCare could become law.

  • The Senate bill had to have state-run Exchanges in order to win the essential votes of moderate Democrats. Without state-run Exchanges, it would not have passed.
  • In order to have state-run Exchanges, the bill needed some way to encourage states to create them without “commandeering” the states. In early 2009, well before House and Senate Democrats introduced their bills, an influential law professor named Timothy Jost advised congressional Democrats of one way to get around the commandeering problem: “Congress could invite state participation…by offering tax subsidies for insurance only in states that complied with federal requirements…”. Both the Finance bill and the HELP bill made premium assistance conditional on state compliance. Senate Democrats settled on the Finance language, which passed without a vote to spare. (Emphasis added.)
  • The Finance Committee had even more reason to condition tax credits on state compliance: it doesn’t have direct jurisdiction over health insurance. Conditioning the tax credits on state compliance was the only way the Committee could even consider legislation directing states to establish Exchanges. Committee chairman Max Baucus admitted this during mark-up.
  • Then something funny happened. Massachusetts voters sent Republican Scott Brown to the Senate, partly due to his pledge to prevent any compromise between the House and Senate bills from passing the Senate. With no other options, House Democrats swallowed hard and passed Senate bill. (They made limited amendments through the reconciliation process. These amendments did not touch the tax-credit eligibility rules, and indeed strengthen the case against the IRS.)

A law limiting tax credits to state-created Exchanges, therefore, is exactly what Congress intended, because Congress had no other choice. On the day Scott Brown took office, any and all other approaches to Exchanges ceased to embody congressional intent. If Congress had intended for some other approach to become law, there would be no law. What made it all palatable was that it never occurred to ObamaCare supporters that states would refuse to comply. The New York Times reports, “Mr. Obama and lawmakers assumed that every state would set up its own exchange.”

Oops.

The only preposterous parts of this debate are the legal theories that the IRS and its defenders have offered to support the Obama administration’s unlawful attempt to create entitlements and impose taxes that Congress clearly and intentionally did not authorize. (But don’t take my word for it. Read the statute. Read our paper. Read this, and this. Watch this video and our debate with Jost. Click on our links to all the stuff the IRS and Treasury and Jost have written.) I wonder if Cohn would tolerate such lawlessness from a Republican administration.

Cohn further claims the many states that are refusing to create Exchanges are “totally sticking it to their own citizens” and people who encourage them “are essentially calling upon states to block their citizens from receiving federal tax breaks, worth as much as several thousand dollars per person. Aren’t conservatives and libertarians supposed to be the party that likes giving tax money back to the people?” Seriously?

  • Fourteen states have enacted statutes or constitutional amendments – often by referendum, often by huge margins – that prohibit state employees from directly or indirectly participating in an essential Exchange function: implementing employer or individual mandates. In those instances, the voters have spoken.
  • Only 22 percent of the budgetary impact of these credits and subsidies is actual tax reduction, and the employer- and individual-mandate penalties triggered by those tax “credits” wipe out most of that. The other 78 percent is new deficit spending. So what we’re really talking about here is $700 billion of new deficit spending.
  • When states refuse to establish Exchanges, they block that new spending, which reduces the deficit and the overall burden of government.
  • In addition, those states exempt their employers from the employer mandate (a tax of $2,000 per worker) and exempt millions of taxpayers from the individual mandate (a tax of $2,085 on families of four earning as little as $24,000).

Who’s for tax cuts now?

Here’s what I think is really bothering Cohn and other ObamaCare supporters. The purpose of those credits and subsidies is to shift the cost of ObamaCare’s community-rating price controls and individual mandate to taxpayers, so that consumers don’t notice them. When states prevent such cost-shifting, they’re not increasing the cost of ObamaCare – they’re revealing it.

And that’s what worries Cohn. If the full cost of ObamaCare appears in people’s health insurance premiums, people will rise up and demand that Congress get rid of it. Cohn isn’t worried about states “sticking it to their citizens.” He’s worried about states sticking it to ObamaCare.

The title of Cohn’s blog post is, “Obamacare’s Critics Refuse to Give Up.” At least we can agree on that much.

Feds May Not Have ObamaCare Operational on Time

The Washington Post reports:

By the end of this week, states must decide whether they will build a health-insurance exchange or leave the task to the federal government. The question is, with as many as 17 states expected to leave it to the feds, can the Obama administration handle the workload.

“These are systems that typically take two or three years to build,” says Kevin Walsh, managing director of insurance exchange services at Xerox. “The last time I looked at the calendar, that’s not what we’re working with.”…

The Obama administration has known for awhile that there’s a decent chance it could end up doing a lot of this. Now though, they’re finding out how big their workload will actually become.

Betcha didn’t see that coming.

Part of the reason the workload is so heavy? “Buying health insurance is a lot more difficult than purchasing a plane ticket on Expedia.” You don’t say. But I thought that’s why we needed government to do it.

Operating an ObamaCare ‘Exchange’ Would Violate Ohio’s Constitution

Unconfirmed reports indicate Ohio officials are considering implementation of an ObamaCare health insurance “exchange.” That would be very interesting if true, because operating an ObamaCare exchange would violate the state’s constitution.

Section 21 of the Ohio Constitution provides:

No federal, state, or local law or rule shall compel, directly or indirectly, any person, employer, or health care provider to participate in a health care system…

“Compel” includes the levying of penalties or fines.

In order to operate an exchange, Ohio employees would have to determine eligibility for ObamaCare’s “premium assistance tax credits.” Those tax credits trigger penalties against employers (under the employer mandate) and residents (under the individual mandate). In addition, Ohio employees would have to determine whether employers’ health benefits are “affordable.” A negative determination results in fines against the employer. These are key functions of an exchange.

Ergo, if Ohio passes a law establishing an exchange, then that law would violate the state’s constitution by indirectly compelling employers and individual residents to participate in a health care system. That sort of law seems precisely what Section 21 exists to prevent.

As I explain in a recent column, 13 other states have passed statutes or constitutional amendments (Alabama, Arizona, Georgia, Idaho, Indiana, Kansas, Louisiana, Missouri, Montana, Oklahoma, Tennessee, Utah, and Virginia) that bar state employees from carrying out these essential functions of an ObamaCare exchange.

The ObamaCare Rebellion Turns Exchange ‘Deadline’ into a ‘Rolling Deadline’

The Obama administration had set a deadline of November 16 for states to signal whether they would create their own health insurance “exchanges,” or let the federal government do it.

But the federal government is so desperate to have states do the heavy lifting, and so few states are interested, that for some time (most recently in a National Review Online column that posted yesterday) I have been predicting the Obama administration would push back that deadline. It seems I was right. Well, today’s CQ Healthbeat reports:

The federal government is likely to extend the Nov. 16 deadline for states to decide whether they will run their own health insurance exchanges, according to several state officials. … Instead, HHS officials are expected to set a new deadline for states that want to operate the marketplaces alone but have a rolling deadline with ongoing discussions for states that are interested in a partnership.

What is the difference between a “rolling deadline” and no deadline?

It’s “the REAL ID rebellion“ all over again.

I Agree with Stuart Butler

ObamaCare is far from settled law. Here’s an excerpt from Butler’s blog post for the Journal of the American Medical Association:

President Obama’s narrow victory has left proponents of the Affordable Care Act (ACA) breathing a collective sigh of relief, believing that the legislation is safe. It’s true, of course, that the election’s outcome has ended the prospect of a new administration using Republican majorities in both chambers and the budget reconciliation process to force outright repeal. But the reality of the economic and political situation means the core elements of the ACA remain very much in play.

The primary reasons for this are the continuing problems with the federal budget deficit and the national debt and the worrying long-term weakness of the economy. Add to that the increasing skepticism that the ACA’s blunt tools will slow costs.

Let’s remember that the most important provisions of the ACA, such as penalties for Americans lacking insurance and firms not offering it, the expansion of Medicaid, and the heavily subsidized exchange-based coverage, do not go into effect until 2014. Meanwhile, new taxes on self-employment and limits on flexible spending accounts are scheduled to go into effect next year, just as Congress will be trying to boost employment growth. Additionally, lawmakers will be desperately searching for ways to delay or cut spending to deal with the deficit. That adds up to 2013 being a year for buyer’s remorse in Congress and around the country.

Read the whole thing.