Tag: Obamacare

Google Co-Founders Sergey Brin & Larry Page: Health Care Regulation Is Blocking Innovation

At a forum sponsored by Khosla Ventures, Google co-founders Sergey Brin and Larry Page discussed the burden of health care regulations in the United States. When asked, “Can you imagine Google becoming a health company?”, Brin responded:

Health is just so heavily regulated, it’s just a painful business to be in. It’s just not necessarily how I want to spend my time. Even though we do have some health projects, and we’ll be doing that to a certain extent. But I think the regulatory burden in the U.S. is so high that I think it would dissuade a lot of entrepreneurs.

Page agreed:

I am really excited about the possibility of data also to improve health. But I think that’s what Sergey’s saying. It’s so heavily regulated, it’s a difficult area…I do worry, you know, we kind of regulate ourselves out of some really great possibilities.

But surely, the United States does not have government-run health care.

The discussion begins at about 29:00.

Tax Notes Praises Law-Review Article that Got Halbig Cases Rolling

A panel of the U.S. Court of Appeals for the D.C. Circuit, which is often referred to as the second-highest court in the land, is expected to rule any day now on Halbig v. Burwell, a legal challenge that “may actually crush,” “kill,” and “wreck” the Patient Protection and Affordable Care Act, a.k.a. Obamacare.

The tax-law journal Tax Notes has chosen the law-journal article that got Halbig and similar cases rolling – Jonathan H. Adler and Michael F. Cannon, Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA, Health Matrix: Journal of Law-Medicine 23, No. 1 (2013): 119-195 – as one of “the 10 law most noteworthy law review articles on employee benefits and executive compensation issues published in 2013 that a broad audience of employee benefits professionals would find relevant and worthy of attention.” Tax Notes calls the Adler-Cannon article “innovative and thought provoking” and one that “practitioners should have read” in 2013.

To read the Adler-Cannon Health Matrix article, click here. For more on the Halbig cases, click here.

Of Course Government Can’t Violate Religious Liberty for No Good Reason

Hobby Lobby is a much simpler and less important case than it’s been made out to be, for reasons the Court clearly spelled out today. Obamacare’s contraceptive mandate had to fall under the Religious Freedom Restoration Act (without even getting to the First Amendment) because it didn’t show – couldn’t show – that there’s no other way of achieving its goal without violating religious beliefs. Moreover, the fact that a for-profit corporation is asserting the statute’s protections is of no moment because neither the corporate form nor the profit motive undermines RFRA’s solicitude for the rights of humans – including owners, officers, and shareholders. In short, the mandate fell because it was a rights-busting government compulsion that lacked sufficient justification. Nobody has been denied access to contraceptives and there’s now more freedom for all Americans to live their lives how they want, without checking their freedom at the office door. 

For more on how the “corporate rights” issue in the case was really a misnomer – because the free exercise of individual humans is at issue regardless of how you style the legalese – see Cato’s amicus brief

ObamaCare’s Exchanges Perform More than a Dozen Functions Besides Issuing Subsidies (Updated)

One of the issues underlying Halbig v. Sebelius and three similar lawsuits making their way through federal courts is whether Congress intentionally restricted the Patient Protection and Affordable Care Act’s (PPACA) private health-insurance subsidies to individuals who buy coverage through state-established Exchanges. If so, that would mean the Internal Revenue Service’s decision to issue subsidies in the 34 states that did not establish Exchanges (i.e., that have federally established Exchanges) is illegal. For more on the IRS’s attempt to rewrite the PPACA in this fashion, click here.

On Twitter, a skeptic challenges my coauthor Jonathan Adler’s claim that Congress intended to withhold subsidies in states that did not establish Exchanges, arguing, “The exchanges serve no purpose at all absent subsidies.” (Read the entire exchange here.)

In legal jargon, the skeptic argues that a literal interpretation of the statutory language restricting subsidies to those enrolled “through an Exchange established by the State” would produce absurd results, and the courts should defer to the agency’s reasonable interpretation.

Exchanges, however, are regulatory bureaucracies that perform other functions and serve other purposes besides dispensing subsidies. The PPACA’s authors, the Obama administration, and the president himself have all acknowledged this.

  • In 2008, Senate Finance Committee chairman Max Baucus wrote, “The Exchange would be an independent entity, the primary purpose of which would be to organize affordable health insurance options, create understandable, comparable information about those options, and develop a standard application for enrollment in a chosen plan.“ 
  • In 2009, President Obama said that health insurance Exchanges “would allow families and some small businesses the benefit of one-stop-shopping for their health care coverage and enable them to compare price and quality and pick the plan that best suits their needs.”
  • Senate Majority Leader Harry Reid (D-NV) has said the PPACA “guarantees real choice and competition to keep insurers in check… By creating strong competition, we’ll reduce skyrocketing health care costs.” 
  • The PPACA’s Senate drafters wrote, “Insurers that jack up their premiums before the Exchanges begin will be excluded–a powerful incentive to keep premiums affordable.”
  • The Internal Revenue Service’s proposed tax-credit rule issued August 17, 2011 explains, “Exchanges will offer Americans competition and choice. Insurance companies will compete for business on a level playing field, driving down costs. Consumers will have a choice of health plans to fit their needs and Exchanges will give individuals and small businesses the same purchasing power as big businesses.”

In fact, the Exchanges are supposed to perform more than a dozen functions besides issuing subsidies. Here are some of the ways the PPACA’s health insurance Exchanges attempt to serve the goals of “one-stop shopping,” price and quality comparisons, expanding choice and competition, and reducing health insurance premiums, even in the absence of subsidies:

  1. Facilitate the creation of SHOP Exchanges, where premium-assistance tax credits are not available. §1311(b).
  2. Certify, recertify, and decertify qualified health plans. §1311(d)(4)(A).
  3. Maintain a toll-free telephone hotline. §1311(d)(4)(B).
  4. Monitor premiums and require issuers of QHPs to justify premium increases. §1311(e)(2). 
  5. Monitor QHPs’ compliance with hospital quality measures. §1311(h).
  6. Monitor QHPs’ compliance with mental health parity regulations. §1311(j).
  7. Require transparency from issuers of QHPs, including periodic financial disclosures; and oversee compilation of information on enrollment, disenrollment, the number of claims that are denied, rating practices, cost-sharing and payments with respect to any out-of-network coverage, enrollee and participant rights, and “other information as determined appropriate by the Secretary.” §1311(e)(3)(A).
  8. Collect data from QHPs on the quality of care, including “case management, care coordination, chronic disease management, medication and care compliance initiatives…, prevent[ing] hospital readmissions through a comprehensive program for hospital discharge that includes patient-centered education and counseling, comprehensive discharge planning, and post-discharge reinforcement by an appropriate health care professional…, reduc[ing] medical errors through the appropriate use of best clinical practices, evidence based medicine, and health information technology…, [and] the implementation of wellness and health promotion activities [and] activities to reduce health and health care disparities.” §1311(g).
  9. Rate QHPs based on quality, price, and patient satisfaction. §1311(d)(4)(D).
  10. Maintain a website with standardized comparative information on qualified health plans. §1311(d)(4)(C), (E).
  11. Make eligibility determinations and enrolling applicants for Medicaid and SCHIP. §1311(d)(4)(F).
  12. Issue exemptions from the individual mandate, and certify such exemptions to the IRS. §1311(d)(4)(H).
  13. Facilitate the purchase of health insurance across state lines. §1311(f).
  14. Establish a Navigator program and awarding grants to Navigators. §1311(i).
  15. Facilitate the merger of the individual and small-group markets (at each state’s discretion). §1312(c)(3).
  16. Provide an employee benefit (health insurance coverage) for members of Congress. §1312(d)(3)(D).

Nor is the PPACA the only piece of legislation Congress debated that would allow for Exchanges without premium subsidies. As I have explained elsewhere, the Democrats who controlled the Senate’s Health, Education, Labor, and Pensions (HELP) Committee in 2009 approved a bill that would have withheld similar Exchange subsidies in states that failed to implement that bill’s employer mandate. This is true whether the state established its own Exchange, or the federal government established one for the state. Since the HELP Committee allowed for the creation of both state-run and federal Exchanges without subsidies, its drafters presumably saw the Exchange as serving more than just that one purpose. 

Twelve Senate Democrats voted for the HELP Committee bill. Why should we be surprised that they–and the remaining Senate Democrats, and the vast majority of House Democrats, and President Obama–would approve the PPACA’s similar provisions?

Update: This post has been updated to include the 2008 Baucus quote.

Update #2: This post has been updated to include the quote from the IRS’s proposed tax-credit rule.

Resources for a Potential Ruling Today in Halbig v. Sebelius

The D.C. Circuit is due to rule any day now, quite possibly today, on Halbig v. Sebelius. For those who haven’t been watching the vigil I keep over at DarwinsFool.comNewsweek calls Halbigthe case that could topple ObamaCare.”

First a little background. The Patient Protection and Affordable Care Act offers refundable “premium-assistance tax credits” to qualified taxpayers who purchase health insurance “through an Exchange established by the State.” The PPACA contains no language authorizing tax credits through the 34 Exchanges established by the federal government in states that declined to establish one themselves, nor does it authorize the Internal Revenue Service to treat those federally established Exchanges as if they had been “established by the State.” Offering benefits only in compliant states was proposed by numerous Republicans and Democrats in 2009, for obvious reasons: Congress cannot force states to implement federal programs, but it can create incentives for states to act, such as by offering health-insurance subsidies to residents of compliant states.

Halbig is one of four cases challenging the IRS’s decision to rewrite the statute and offer tax credits in the 34 states with federal Exchanges. The plaintiffs are individuals and employers who are injured by the IRS’s overreach because, due to the PPACA’s many inter-locking pieces, issuing those illegal tax credits subjects them to illegal penalties.

Since a ruling may come today (or some Tuesday or Friday hence, as is the D.C. Circuit’s habit), here are some materials for those who want to hit the ground running.

Update: The D.C. Circuit has handed down rulings for today, and Halbig is not among them. Click here to check on the court’s most recent rulings.

David Hyman on PPACA Implementation

David A. Hyman is the H. Ross & Helen Workman Chair in Law and director of the Epstein Program in Health Law and Policy at the University of Illinois Urbana-Champaign, as well as an adjunct scholar at the Cato Institute.

Earlier this month, Hyman gave the following erudite presentation on the implementation of the Patient Protection and Affordable Care Act – which he calls PPACA, not “ObamaCare” or “the Affordable Care Act” – at a faculty seminar hosted by the University of Chicago’s MacLean Center for Clinical Medical Ethics.

Hyman’s remarks begin at about 5:00.

Be sure to read Hyman’s excellent satire, Medicare Meets Mephistopheles.

Cato Keeps Challenging an Illegal IRS Rule Regarding Obamacare

Last month, Cato filed a brief in the D.C. Circuit case of Halbig v. Sebelius, supporting a challenge to the IRS’s unilateral and unauthorized decision to extend tax credits to individuals who purchased health insurance from exchanges that were not established by their state. Now we’re continuing out advocacy in this area by filing a brief, joined by the Pacific Research Institute and the American Civil Rights Union, supporting the challengers in a similar Fourth Circuit case.

Here’s the background: To encourage the purchase of health insurance, the Affordable Care Act added a number of deductions, exemptions, and penalties to the federal tax code. As might be expected from a 2,700 page law, these new tax rules have the potential to interact in unforeseen and counter-intuitive ways. As first discovered by Michael Cannon and Jonathan Adler, one of these new tax provisions, when combined with state decision-making and IRS rule-making, has given Obamacare yet another legal problem. The legislation’s Section 1311 provides a generous tax credit for anyone who buys insurance from an insurance exchange “established by the State”—as an incentive for states to create the exchanges—but only 16 states have opted to do so. In the other states, the federal government established its own exchanges, as another section of the ACA specifies. But where § 1311 only explicitly authorized a tax credit for people who buy insurance from a state exchange, the IRS issued a rule interpreting § 1311 as also applying to purchases from federal exchanges. This creative interpretation hurts individuals like David King, a 63-year-old resident of Virginia.

Because buying insurance would cost King more than 8% of his income, he should be immune from Obamacare’s tax on the decision not to buy insurance (the “tax” that you’ll recall Chief Justice Roberts devised in his NFIB v. Sebelius opinion). After the IRS expanded § 1311 to subsidize people in states with federal exchanges (like Virginia), however, King could have bought health insurance for an amount low enough to again subject him to the Roberts tax. King argues that he faces these costs only because the IRS exceeded the scope of its powers.

In our latest brief, we argue that the IRS’s decision wasn’t just unauthorized, it was a blatant invasion of the powers exclusively awarded to Congress in Article I of the Constitution. This error was compounded by the district court’s holding that the IRS actions were lawful because, even if Obamacare explicitly restricts the availability of tax credits to states which set up their own exchanges, the expansion of tax-credit availability serves the law’s general purpose of making healthcare more affordable. By elevating its own perception of congressional purpose over the statutory text, the district court ignored the cardinal principle that legislative intent must be effected by the words Congress uses, not the words it may have meant or should have chosen to use.

In other words, if Congress wants to extend the tax credit, it can do so by passing new legislation. The only reason for executive-branch officials not to go back to Congress for clarification, and instead legislate by fiat, is to bypass the democratic process, thereby undermining constitutional separation of powers. This case ultimately isn’t about money, the wisdom of individual health care decision-making, or even political opposition to Obamacare. It’s about who gets to create the laws we live by: the democratically elected members of Congress, or the bureaucrats charged with no more than executing the laws that Congress passes and the president signs.

The U.S. Court of Appeals for the Fourth Circuit (based in Richmond) will hear argument in King v. Sebelius in May.