Tag: ppaca

IRS Officials Created a New Entitlement Program, Because They Felt Like It

Over at DarwinsFool.com, I summarize a lengthy report issued by two congressional committees on how the Treasury Department, the Internal Revenue Service, and the Department of Health and Human Services conspired to create a new entitlement program that is authorized nowhere in federal law. Here’s an excerpt in which I summarize the summary:

Here is what seven key Treasury and IRS officials told investigators.

In early 2011, Treasury and IRS officials realized they had a problem. They unanimously believed Congress had intended to authorize certain taxes and subsidies in all states, whether or not a state opted to establish a health insurance “exchange” under the Patient Protection and Affordable Care Act. At the same time, agency officials recognized: (1) the PPACA plainly does not allow those taxes and subsidies in non-establishing states; (2) the law’s legislative history offers no support for their theory that Congress intended to allow them in non-establishing states; and (3) Congress had not given the agencies authority to treat non-establishing states the same as establishing states.

Nevertheless, agency officials agreed, again with apparent unanimity, to impose those taxes and dispense those subsidies in states with federal Exchanges, the undisputed plain meaning of the PPACA notwithstanding. Treasury, IRS, and HHS officials simply rewrote the law to create a new, unauthorized entitlement program whose cost “may exceed $500 billion dollars over 10 years.” (My own estimate puts the 10-year cost closer to $700 billion.)

The full post includes details some pretty stunning examples of how agency officials were derelict in their duty to execute faithfully the laws Congress enacts.

IRS Illegally Expands Obamacare

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 laws have the potential to interact in unforeseen and counterintuitive ways. As first discovered by Michael Cannon and Jonathan Adler, one of the new tax provisions, when combined with state decisionmaking and Interal Revenue Service rulemaking, has given Obamacare yet another legal problem.

Here’s the deal: The legislation’s §1311 provides a generous tax credit for anyone who buys insurance from an insurance exchange “established by the State.” The provision was supposed to be an incentive for states to create their own exchanges, but only 16 states have opted to do so. In the other states, the federal government established its own exchange, 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 most obviously hurts employers, who are fined for every employee who receives such a tax credit/subsidy to buy an exchange plan when their employer fails to comply with the mandate to provide health insurance. But it also hurts some individuals, such as David Klemencic, a lead plaintiff in one of the lawsuits challenging the IRS’s tax-credit rule. Klemencic lives in a state, West Virginia, that never established an exchange, and for various reasons he doesn’t want to buy any of the insurance options available to him. Because buying insurance would cost him more than 8% of his income, he should be immune from Obamacare’s tax on the decision not to buy insurance. After the IRS expanded §1311 to subsidize people in states with federal exchanges, however, Klemencic could’ve bought health insurance for an amount low enough to again subject him to the tax for not buying insurance.

Klemencic and his fellow plaintiffs argue that they face these costs only because the IRS exceeded the scope of its powers by extending a tax credit not authorized by Congress. The district court rejected that argument, ruling that, under the highly deferential test courts apply to actions by administrative agencies, the IRS only had to show that its interpretation of §1311 was reasonable—which the court was satisfied it had.

Cato and the Pacific Research Institute have now filed an amicus brief supporting the plaintiffs on their appeal to the U.S. Court of Appeals for the D.C. Circuit. While it is manifestly the province of the judiciary to say “what the law is,” where the law’s text leaves no question as to its meaning—as is the case here with the phrase “established by the State”—it is neither right nor proper for a court to replace the laws passed by Congress with those of its own invention or the invention of civil servants. If Congress wants to extend the tax credit beyond the terms of the Affordable Care Act, 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 decisionmaking, 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.

Halbig v. Sebelius will be heard by the D.C. Circuit on March 25 (the same day that the Supreme Court hears the Hobby Lobby contraceptive-mandate cases).

The More We Learn about ObamaCare, the Less the President Wants to Discuss It

Remember how the more we learned about ObamaCare, the more we would like it? Well, it seems the more we learn about this law, the less President Obama wants to talk about it. He relegated it to just a few paragraphs, tucked away near the end of his latest State of the Union political rally speech. And while he defended the law, he closed his health care remarks by begging Congress not to repeal it, and asking the American people to nag each other into buying his health plans.

My full response to the president’s health care remarks are over at my Forbes blog, Darwin’s Fool. Here’s an excerpt:

Note what the president did not say: he did not say that [Amanda] Shelley would not have gotten the care she needed. That was already guaranteed pre-ObamaCare. If ObamaCare saved Shelley from something, it was health care bills that she couldn’t pay. It’s impossible to know from this brief account just how much that might have been. But we can say this: making health care more affordable for Shelley should not have cost anyone else their job. It may be that ObamaCare doesn’t reduce bankruptcies at all, but merely shifts them from medical bankruptcies to other types of bankruptcies because more people cannot find work.

Read the whole thing.

Actually, I should amend that. Making health care more affordable will cost some people their jobs, and that’s okay. Progress on affordability comes when less-trained people (e.g., nurse practitioners) can provide services that could previously be provided only by highly trained people (e.g., doctors). When that happens, whether enabled by technology or removing regulatory barriers, prices fall – and high-cost providers could lose their jobs. The same thing has happened in agriculture, allowing food prices to drop and making it easier to reduce hunger. My point was that we should not be making health care more affordable for Ms. Shelley by taxing her neighbor out of a job.

Obama versus the Constitution

Those engaged in my line of work – explaining and defending the Constitution, the most liberty-friendly system of governance yet devised – have been kept busy by the current occupant of the White House and the executive agencies he controls. President Obama’s signature health care legislation alone provides endless “teachable moments” regarding our founding document. To paraphrase Nancy Pelosi, the more we find out about Obamacare and its implementation, the more constitutional violations we find.

But if Obamacare is the biggest constitutional – let alone policy – disaster that Barack Obama has inflicted on the nation, it alas is far from the only one. As I put it in a new Forbes.com op-ed:

One of Barack Obama’s chief accomplishments has been to return the Constitution to a central place in our public discourse.

Unfortunately, the president fomented this upswing in civic interest not by talking up the constitutional aspects of his policy agenda, but by blatantly violating the strictures of our founding document. And he’s been most frustrated with the separation of powers, which doesn’t allow him to “fundamentally transform” the country without congressional acquiescence.

But that hasn’t stopped him. In its first term, the administration launched a “We Can’t Wait” initiative, with senior aide Dan Pfeiffer explaining that “when Congress won’t act, this president will.” And earlier this year, President Obama said in announcing his new economic plans that “I will not allow gridlock, or inaction, or willful indifference to get in our way.”

And so, as we reach the end of another year of political strife that’s fundamentally based on clashing views on the role of government in society, I thought I’d update a list I made two years ago and hereby present President Obama’s top 10 constitutional violations of 2013.

Here’s the list (only half of which is Obamacare-related):

  1. Delay of Obamacare’s out-of-pocket caps. 
  2. Delay of Obamacare’s employer mandate.
  3. Delay of Obamacare’s insurance requirements.
  4. Exemption of Congress from Obamacare. 
  5. Expansion of the employer mandate penalty through IRS regulation.
  6. Political profiling by the IRS.
  7. Outlandish Supreme Court arguments. 
  8. Recess appointments. 
  9. Assault on free speech and due process on college campuses.
  10. Mini-DREAM Act.

For more details, read the whole thing. Of course, there are still two days left in the year, so who knows what else may be in store.

 

WSJ: Dems Nuked Filibuster to Defeat Halbig v. Sebelius

Wall Street Journal editorial surmises that Senate Democrats eliminated the filibuster for non-Supreme Court judicial appointments so they could pack the U.S. Court of Appeals for the D.C. Circuit with judges that would block an important ObamaCare case called Halbig v. Sebelius:

Democrats surprised Republicans in November with how quickly they dismantled the filibuster, and we are beginning to see why. Another major challenge to ObamaCare is being heard by a D.C. Circuit district judge, this time concerning whether subsidies can be delivered by the federal exchanges. Then there’s the new IRS proposed rule curtailing the political speech of 501(c)(4) groups. This rule will also probably make its way to the D.C. Circuit, and blocking GOP-leaning groups from politicking is part of the Democratic strategy for holding the Senate in 2014.

Democrats figure they have a better chance to win if they have more nominees on the appeals court—either in a three-judge panel or en banc. The plaintiffs could appeal to the Supreme Court if they lose, but you never know if the Justices will take a case.

Case Western Reserve University law professor Jonathan H. Adler and I laid the groundwork for Halbig and three other cases challenging President Obama’s attempt to tax Americans without congressional authorization in this law-journal article.

Obamacare’s Top 10 Constitutional Violations

Two years ago this week, I published an op-ed called “President Obama’s Top 10 Constitutional Violations.” Although it didn’t go into depth about any particular issue, it struck a chord (note to aspiring pundits: readers and media bookers like lists, particularly at year’s end).

There’s so much material to choose from for an updated piece on which I’m long overdue, but in the meantime the House Judiciary Committee had an important hearing last week on the president’s constitutional duty “to take care that the laws be faithfully executed.” My colleagues Michael Cannon and Nicholas Quinn Rosenkranz testified, as did GW law professor Jonathan Turley (who voted for Obama in 2008 and is not known to be libertarian or conservative), and their devastating testimony is a collective tour de force regarding this administration’s incredible and unconstitutional power grab. (My friend and frequent sparring partner Simon Lazarus of the Constitutional Accountability Center also testified, on the other side, offering a valiant if ultimately insufficient defense.)

Given the state of current affairs, the hearing focused on Obamacare, whose problematic rollout should have come as no surprise to those who follow this blog. Quite apart from the healthcare.gov fiasco – incompetent, sure, but it’s not unconstitutional to have a bad website – you simply cannot require expansive health “insurance” for all without regard to preexisting conditions and expect insurers not to cancel nonconforming policies or increase premiums. (Forget never running a business or caring about the Constitution; has nobody in the White House ever taken an economics class?)

After watching snippets of the hearing and reading the written testimony, I thought maybe I should start my “top 10 constitutional violations” update with the Affordable Care Act alone. But it seems that I’m not the only one thinking along these lines. Hot off the presses, at 10am today, the office of Senator Ted Cruz (R-TX) released its second report on “The Obama Administration’s Attempts to Expand Federal Power” – the first was on the Supreme Court’s unanimous rejection of the Justice Department’s more outlandish positions, a trend I’ve written about as well – titled “The Administration’s Lawless Acts on Obamacare and Continued Court Challenges to Obamacare.”

Here are the seven items the new Cruz report highlights:

Category One: Implementation Contrary to Statutory Text

  1. Unilateral grant of a one-year delay on all Obamacare health insurance requirements.
  2. Unilateral delay of the employer mandate.
  3. Unilateral delay of out-pocket caps.
  4. Allowing congressional staff to continue on government-subsidized health care.

Category Two : Pending Court Challenges

  1. Violates the Origination Clause because it’s a revenue-raising bill that originated in the Senate.
  2. Contraception/abortifacient mandate violates religious liberties.
  3. Expansion of employer mandate’s penalty through IRS regulation.

Add to those the individual mandate (which the Supreme Court struck down before Chief Justice Roberts rewrote and upheld the provision as a tax), the coerced expansion of Medicaid (which the Court made voluntary), and the Independent Payment Advisory Board (litigation ongoing), and you’ve got an even ten. And that’s without straining to find the constitutional defects buried in thousands of pages of legislation and hundreds of thousands of pages of regulations.

Forget PPACA, ACA, and Obamacare; what people really ought to call the healthcare law is the “Constitutional Scholar Full Employment Act.”

‘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.