Tag: ppaca

‘Health Law Critics Prepare to Battle Over Insurance Exchange Subsidies’

The New York Times:

WASHINGTON — Critics of the new health care law, having lost one battle in the Supreme Court, are mounting a challenge to President Obama’s interpretation of another important provision, under which the federal government will subsidize health insurance for millions of low- and middle-income people.

Starting in 2014, the law…offers subsidies to help people pay for insurance bought through markets known as insurance exchanges.

At issue is whether the subsidies will be available in exchanges set up and run by the federal government in states that fail or refuse to establish their own exchange…

“The language of the statute is explicit,” Mr. Blumstein said. “Subsidies accrue to people who obtain coverage through state-run exchanges. The I.R.S. tries to get around that by providing subsidies for all insurance exchanges. That interpretation will almost certainly be challenged by someone.”

The most likely challenger, Mr. Blumstein said, is an employer penalized because one or more of its employees receive subsidies through a federal exchange. Employers may be subject to financial penalties if they offer no coverage or inadequate coverage and at least one of their full-time employees receives subsidies.

Michael F. Cannon, director of health policy studies at the libertarian Cato Institute, said the link between subsidies and penalties was a crucial part of the law.

“Those tax credits trigger the penalties against employers,” Mr. Cannon said. If workers cannot receive subsidies in states with a federal exchange, their employers cannot be penalized, he said.

Tax credits are not subsidies, of course. But ObamaCare’s $800 billion of refundable premium-assistance tax credits and cost-sharing subsidies are three parts subsidy (i.e., government spending) and only one part tax reduction.

Obamacare Rethink Maybe

Right before leaving town for the summer, the Supreme Court ruled 8-1 that “Rethink Maybe” was the pop hit of the summer, overtaking last year’s remake of “Every Breath You Take”:

Rethink Maybe

I filed a brief with the Court,
Don’t worry, it’s rather short
Constitution and not tort,
But now you’re in my way

I’d trade my soul for a wish,
Limited powers it is
Nobody expected this,
But now you’re in my way

Blue-eyed stare was holdin’,
Black-robed, balls-strikes callin’
Then you started cavin’
Where you think you’re goin’, CJ?

Hey, John Roberts,
This is crazy,
Mandates aren’t taxes,
So rethink, maybe?

It’s hard to look right,
At you CJ,
Your op makes no sense,
So rethink, maybe?

I just read you,
The ruling’s crazy,
Read Article I,
And rethink, maybe?

The other justices,
Ruled on the law,
But you played politics,
So rethink, maybe?

You thought Congress was remiss,
But changed your mind after this
You gave me the Commerce Clause,
But still, you’re in my way

I beg, and argue and plead
Had foresight, reason indeed
I didn’t know how I’d feel,
But now it’s in my way

Blue-eyed stare was holdin’,
Black-robed, balls-strikes callin’
Then you started cavin’
Where you think you’re goin’, CJ?

It’s hard to look right,
At you CJ,
Your op makes no sense,
So rethink, maybe?

Hey, John Roberts,
This is crazy,
Mandates aren’t taxes,
So rethink, maybe?

It’s hard to look right,
At you CJ,
Your op makes no sense,
So rethink, maybe?

All other justices,
Ruled on the law,
Mandates aren’t taxes,
So rethink, maybe?

When you came onto the Court
I thought you so rad
My man-crush so bad
My man-crush so, so bad

Now thanks to you I’ll pay this tax
It made me so mad
But now I’m just sad
It makes me so, so sad

It’s hard to look right,
At you CJ,
Mandates aren’t taxes,
So rethink, maybe?

I just read you,
The ruling’s crazy,
Read Article I,
And rethink, maybe?

The other justices,
Ruled on the law,
But you played politics,
So rethink, maybe?

When you came onto the Court
I thought you so rad
My man-crush so bad
My man-crush so, so bad

Now thanks to you I’ll pay this tax
It makes me so sad
And you should know that

So rethink, maybe?

HHS Offers to Pay Six Years of Operating Costs for Some States’ ObamaCare Exchanges

That’s my read of this.

ObamaCare gives HHS the authority to make unlimited grants to help states create Exchanges. But that authority expires on December 31, 2014. HHS just issued an announcement that they will issue grants right up to midnight on December 31—and that some of those grants will be so big that they will last for five years:

Q4: What is the last day that a State can spend its award?

A4: Grantees are encouraged to drawdown funding within their budget period (up to one year for Level One and up to three years for Level Two grants); however, at the recommendation of CCIIO’s State Officer and at the discretion of the Grant Management Officer, grantees may receive a no-cost extension that will allow them to spend funding up to the expiration date of the project period. At HHS’s discretion, a project period can be extended for a maximum of five years past the date of the award. Note, however, that all spending of §1311(a) funds awarded under a cooperative agreement must be consistent with the scope of the statute, FOA, and terms and conditions of the awarded cooperative agreement. [Emphasis added.]

The last sentence is there just to make sure no one suspects them of violating the law, wink-wink.

Since HHS can make unlimited grants in the first year that Exchanges are supposed to operate (2014), this means HHS is trying to pay for the operating expenses of some states’ Exchanges for six years (2014-2019).

Anti-Universal Coverage Club in the Washington Post

Ezra Klein:

Michael Cannon, director of health-care policy at the libertarian Cato Institute, formed the “Anti-Universal Coverage Club,” whose members “reject the idea that government should ensure that all individuals have health insurance.” This attitude is now the norm within the Republican Party, even if it is rarely acknowledged so starkly.

Dear Republicans: You’re welcome.

Chief Justice Roberts Sold Out the Constitution for Less Than Wales

In the 1966 film A Man for All Seasons (an Oscar-winning adaptation of a play about the life of Sir Thomas More), an ambitious young lawyer named Richard Rich perjures himself so that the Crown can secure More’s conviction for treason.  (Sir Thomas More was the 16th-century Lord Chancellor of England who refused to sign a letter asking Pope Clement VII to annul King Henry VIII’s marriage to Catherine of Aragon and resigned rather than take an oath declaring the king to be the head of the Church of England.)  Rich is promoted to Attorney General of Wales as a reward.  Upon learning of Rich’s connivance, More plaintively asks, “Why Richard, it profits a man nothing to give his soul for the whole world … but for Wales?”

So it is with John Roberts, who like his namesake Justice Owen Roberts changed his vote on Obamacare in service to political considerations.  (That’s actually unfair to Owen Roberts because his so-called “switch in time that saved nine,” which provided the decisive vote to uphold the New Deal after years of reversals, came before FDR announced his Court-packing scheme.)

That is, at some point between the justices’ initial conference the Friday of Obamacare-argument week in late March and when the first opinions were circulated in early June, Chief Justice Roberts changed from striking down the individual mandate, and with it the whole law, to upholding on the flimsy reed of the taxing power.  Roberts’s opinion rewriting the law “construing” the mandate as a tax is unconvincing, to say the least – even the liberal justices weren’t so enthusiastic about it, though they were happy to go along with any ratification of federal power – but it’s now apparent that he was simply grasping at any way to uphold Obamacare while not expanding the Commerce Clause.

There are many theories on why he did this – I don’t think it’s because Jeffrey Rosen wrote an op-ed, or even because President Obama and Senator Pat Leahy (D-VT) made speeches – but they mainly boil down to the idea of wanting to preserve the Supreme Court’s reputation as an impartial arbiter, one that doesn’t get involved in highly charged political disputes during a presidential election year.

Now, let’s set aside the issue of whether Roberts’s split-the-baby opinion actually helps the Court’s institutional integrity – some polls already show a decline in approval for the Court from what was already a near-historic low – and consider why this sort of reputation-preservation matters and whether it’s worth torturing the law to accomplish it.  The way I see it, the federal judiciary (with the Supreme Court at its apex) is our system of government’s premier counter-majoritarian institution, holding the political branches’ feet to the constitutional fire.  Courts are supposed to decide the law and let the political chips fall where they may.  Implicit in the Constitution’s careful separation of powers –and made explicit in the foundational case of Marbury v. Madison – is the idea of judicial review, that federal courts have the obligation, when “cases or controversies” are brought before them, to review them against the Constitution and, if they go beyond enumerated federal power or violate protected rights, to strike them down.

That’s why it’s so important that courts be independent and free from political pressure.  Particularly with regard to major controversies that polarize the nation, courts – and especially the Supreme Court – need their reputation for dispassionate and independent legal reasoning so that their often unpopular opinions are followed and respected, rather than fomenting resistance and revolution.

The health care cases – or Health Care Cases, as they may become known – presented nothing if not one such singular moment.  People across the country were anxiously awaiting a ruling, and would have accepted (if bitterly) a 5-4 decision on Commerce Clause grounds.  I obviously think that upholding the mandate, and with it the rest of Obamacare, would have been wrong – and unpopular.  Striking it down would similarly have provoked heated and fervent criticism, albeit only from the minority of Americans (but a majority of legal and media elites) who support the law.  But in any event, the Court’s decision would have “simply” been a very high profile legal ruling, just the sort of thing for which the Court needs all that accrued institutional respect and gravitas.

What we have instead, however, is a political decision dressed up in legal robes, judicially enacting a law Congress did not pass and would not have passed, all to “save” the Court to live to fight another day.  But what is that other day?  I just don’t understand what Roberts is saving the Court for if not the sort of big, tough case that Obamacare exemplified.

In short, John Roberts, in refraining from making that hard balls-and-strikes call he discussed at his confirmation hearings, has sold out his legal soul for even less than Wales.

Relatedly, Cato’s forum on the Obamacare ruling is about to start.  You can watch it live.

Is the Individual Mandate a Tax?

From my 2010 paper “Obama’s Prescription for Low-Wage Workers; High Implicit Taxes, Higher Premiums”:

President Obama argues that a legal requirement for individuals to purchase health insurance is not a tax. Yet many economists, including some of President Obama’s economic advisers, consider it to be a type of tax.

Princeton University health economist Uwe Reinhardt writes, “[Just because] the fiscal flows triggered by [the] mandate would not flow directly through the public budgets does not detract from the measure’s status of a bona fide tax.”

MIT health economist Jonathan Gruber writes, “Suppose … the government mandated that everyone buy full insurance at the average price… . This would not be a very attractive plan to careful consumers … who could view themselves as essentially being taxed in order to support this market, by paying higher premiums than they should based on their risk.”

President Obama’s National Economic Council chairman Larry Summers writes, “Essentially, mandated benefits are like public programs financed by benefit taxes.”

Sherry Glied, President Obama’s appointee to assistant secretary for planning and evaluation at the Department of Health and Human Services, writes, “The individual mandate … is in many respects analogous to a tax. It requires people to make payments for something whether they want it or not.”

When the Clinton administration proposed an individual mandate in 1993, the CBO went so far as to treat the mandatory premiums that Americans would pay as federal revenues and include them in the federal budget. So far, the CBO has not done the same for the mandates in the House and Senate bills. (As Reinhardt suggests, that does not imply that those mandates are not a tax.)

Each bill would also impose penalties on individuals (and employers) who do not comply with the health-insurance mandates. Those penalties would be paid to the Internal Revenue Service along with one’s income taxes.