Tag: individual mandate

House Committee Threatens to Subpoena Documents Related to IRS’s Illegal ObamaCare Taxes

Last Friday, House Oversight Committee chairman Darrell Issa (R-CA) and colleagues sent a letter to Treasury Secretary Timothy Geithner and Internal Revenue Service Commissioner Douglas Shulman accusing Treasury of “either willfully misleading the Committee or…purposefully withholding information that is essential to the Committee’s oversight effort.”

As Jonathan Adler and I document in our forthcoming Health Matrix article, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA,” the IRS has announced it will impose ObamaCare’s taxes on employers and individuals whom Congress expressly exempted from those taxes, and will send potentially hundreds of billions of taxpayer dollars to private health insurance companies, also contrary to the plain language of the statute. Oklahoma attorney general Scott Pruitt has filed a legal challenge to the IRS rule that imposes those illegal taxes.

On August 20, the committee sent IRS commissioner Shulman a letter requesting “all legal analysis, internal or external, conducted by the IRS which authorizes IRS to grant premium-assistance tax credits in federal Exchanges,” and “all documents and communications between IRS employees and employees of the White House Executive Office of the President or any other federal agency or department referring or relating to the proposed IRS rule or final IRS rule.”

When Treasury responded for the IRS on October 12, according to committee member Rep. Scott DesJarlais (R-TN), it “failed to include a single document, memorandum, communication, or email created before the publication of the proposed rule on August 17, 2011”—i.e., when all the interesting discussions would have occurred. The committee’s second letter complains, “Treasury did not provide a single piece of evidence to support its claim that IRS complied with the standard process when issuing this rule.”

Thus, the committee threatened, “If you do not provide all of the requested information by Thursday, October 25, 2012, the Committee will consider the use of compulsory process.” Developing…

For more on this issue, see here, herehere, here, here, here, and here.

‘ObamaCare Has Huge Drawbacks that Outweigh Its Plausible Benefits’

Bob Samuelson:

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.

Read the whole thing.

Exactly What Is Max Baucus Saying Here? (Updated)

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.

For more on this issue, see what Adler and I have written for the law journal Health Matrix, the Wall Street JournalUSA Today, the Health Affairs blog, and National Review Online.

Update (August 22, 2014): I blogged over at DarwinsFool.com that I have changed my mind on the Baucus-Ensign colloquy. Not that it matters much. The D.C. Circuit placed no weight on Baucus’ comments and ruled for the plaintiffs anyway.

‘The Obamacare Cases Keep Coming’

Jonathan Adler at National Review Online:

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.

At a Cato briefing on Capitol Hill this Wednesday, Adler and I will be speaking about one of those cases.

‘No State Is Going to Be Able to Be Fully Certified on Jan. 1’

I was traveling when the Washington Post published this article on D.C.’s efforts to implement ObamaCare:

If you want to know what health reform in action looks like, here’s what you should picture: a nondescript conference room, on the fourth floor of a government building, with about four dozen people sitting in rows of red chairs and one fluorescent light that keeps flickering on and off…

[T]his is actually a pretty important place. It’s where government officials decide what the Obama administration’s signature legislative achievement will look like for residents of the nation’s capitol…

It started with the first agenda item: Deciding what set of essential health benefits the District of Columbia will require all insurance carriers to cover. Even in one of the most Democratic-leaning districts in the country, there’s was not exactly enthusiasm for this new piece of federal regulation.

“This is mandated by the law,” District of Columbia insurance commissioner Bill White noted. “This is not something anyone here decided to do.”

Still, they did have to set an essential benefit package…

That sounds like to me like bureaucratic hell in action more than health care reform in action. And the last part, about ObamaCare or federal bureaucrats requiring D.C. to make these decisions, isn’t even true.

One consolation is that it looks like not even the 14 states that want to establish ObamaCare’s health insurance Exchanges will be able to do so on time.

Even with widespread support, the District still has a to-do list that stretches 11 PowerPoint slides long…

All of it is supposed to be done by Jan. 1, 2013, but officials here recognize, despite their commitment, it’s just not possible. Even the most stalwart of Obamacare supporters just simply have too much work to meet that deadline…

“No state is going to be able to be fully certified on Jan. 1,” said Bonnie Norton, D.C’s acting director of health reform.. “When they passed the ACA, they were highly optimistic about the timeline for states to implement exchanges.”

Does anyone really think that ObamaCare’s Exchanges will be up an running on time by October 1, 2013?

ObamaCare’s ‘Essential Health Benefits’: Few States Implement, HHS ‘Is in Clear Violation of the Law’

ObamaCare directs the Secretary of Health and Human Services to define the “essential health benefits” that all consumers in the individual and small-group health insurance markets must purchase. HHS Secretary Kathleen Sebelius kicked that decision to the states, giving them a deadline of this past Friday, September 30. Kaiser Health News reports that all of 16 states submitted an Essential Health Benefits (EHB) benchmark to HHS by the deadline.

But did Sebelius have the authority to kick this decision to states? In a September 26 letter to Sebelius, Pennsylvania Insurance Commissioner Michael Consedine writes:

[T]he PPACA clearly states that the Secretary of HHS is to define the EHB package for policies offered both inside and outside of health insurance exchanges. While the language in PPACA was plain that this statutory responsibility fell on HHS, in December of last year HHS issued guidance preliminarily indicating states must select a benchmark design, with HHS potentially acting as final arbiter…of that selection. (Emphasis added.)

Is September 30 even a deadline?

Some communications from your agency indicate that this is a suggested response date while others indicate that it is a deadline of some sort. We again are asking for clarity.

Letting states make that decision will increase flexibility, though. Right?

[I]n reality the guidance placed additional restrictions on the EHB selection rather than flexibility. HHS guidance appears to render the states’ ability to innovate and to make an independent choice illusory. (Emphasis added.)

Indeed, the 16 states who have complied may be in for a rude awakening.

HHS indicated that any selection by the states will be subject to additional review, but we have no definitive guidance as to what, if any, weight will be given to a state’s selection. The minimum amount of information provided to date invites concern that your agency will alter or override a state’s submission…raising serious questions as to whether states have any meaningful ability to make a definitive selection of an EHB benchmark. (Emphasis added.)

Pennsylvania thus declined to submit one, and effectively told Sebelius to do her job.

Louisiana went a step further, threatening to hold Sebelius accountable if she doesn’t. In a September 27 letter, Louisiana’s Secretary of Health and Hospitals Bruce Greenstein and Insurance Commissioner James Donelson noted that the December 2011 “bulletin” merely stated that HHS “intend[s] to propose” a deadline of  September 30 for making that decision—meaning that the bulletin “neither… has the force of law, nor commits federal regulators to any particular course of action.” Moreover:

[I]t is our State’s conclusion that while the bulletin states a decision is to be made by [September 30], this “deadline” has never been formalized through the official rulemaking process. As long as formal rules do not exist, the federal government can change its approach. Since the federal government is not bound by these bulletins, neither are the States. As such, the State of Louisiana is not legally required to submit a benchmark preference by [September 30,] 2012. The State of Louisiana will not permit the federal government to dictate to our residents a default benchmark plan, as the federal government, in its disregard of the requirements of the Administrative Procedure Act regarding essential health benefits and other provisions of the PPACA, has no authority to do so under federal or Louisiana law until regulations are published in the Federal Register, following established notice and comment procedure.

The process developed for defining the essential health benefit benchmark has been a completely new method of establishing law without proper rulemaking. Implementation of new policies without open and public comment and publication in the Federal Register is in clear violation of the law.

The administration has charged states to build what the federal government mandates, but the federal government has provided [only] informal guidance and incomplete rules and regulations…Accordingly, there will be no essential health benefits package for the State of Louisiana, and we will pursue all avenues to prevent the federal government from selecting one on behalf of our state. (Emphasis added.)

As I have written previously, “implementing these parts of the law can only lead to more regulation, fewer choices, and higher costs. And of course, state officials will take the blame when ObamaCare starts increasing costs and denying care to people. There is simply no good reason for states to assume this impossible, harmful, and thankless task.”

ObamaCare’s Authors ‘Handed Their Opponents a Weapon’

Ramesh Ponnuru writes about ObamaCare’s greatest vulnerability:

The debate over President Barack Obama’s health-care law has taken another twist. Now conservatives and libertarians are defending it, while the administration tries to toss part of the legislation out.

The reason for this role reversal is that the drafters of the law outsmarted themselves and handed their opponents a weapon. Now they would like to pretend the law doesn’t say what it does.

Obama’s plan makes tax credits available to people who get health insurance from exchanges set up by state governments. If states don’t establish those exchanges, the federal government will do so for them. The federal exchanges, however, don’t come with tax credits: The law authorizes credits only for people who get insurance from state-established exchanges. And that creates some problems the administration didn’t foresee, and now hopes to wish away…

The administration’s response to the impending failure of its signature legislation – a failure resulting entirely from its flawed design – has been to ignore the inconvenient portion of the law. In May, the Internal Revenue Service decided it would issue tax credits to people who get insurance from exchanges established by the federal government. It has thus exposed firms and individuals to taxes and penalties without any legal authorization. Obviously, that situation sets the stage for lawsuits.

The plaintiffs will have a strong case. Jonathan Adler and Michael Cannon – two libertarians, the first a law professor at Case Western Reserve University and the second a health-care analyst at the Cato Institute – have done more than anyone to bring attention to this issue. They point out that every health bill advanced by Senate Democrats clearly made tax credits conditional on [states implementing the law]. They have also uncovered that during the debate over the bill, Senator Max Baucus, a Democrat from Montana, explicitly said the same thing.