Topic: Health Care & Welfare

17 Errors & Omissions in Vox’s Otherwise Excellent History of King v. Burwell

This week, the Supreme Court will hear oral arguments in King v. Burwell, one of four legal challenges to an IRS regulation that purports to implement the Patient Protection and Affordable Care Act, but in fact vastly expands the IRS’s powers beyond the limits imposed by the Act. Just in time for oral arguments before the Court, Vox’s Sarah Kliff has produced what I think may be the best history of King v. Burwell and related cases I’ve seen. Still, there are a few important errors and omissions, listed here in rough order of importance.

Government Sends Wrong Tax Form to Nearly One Million Obamacare Enrollees

Fresh off another victory lap last week, Obamacare supporters awoke last Friday to the news that the government had given nearly one million exchange enrollees incorrect tax forms that could significantly affect their tax returns. 800,000 enrollees in the federal exchange and roughly 100,000 in California were given the wrong forms, called 1095-As, which provide a monthly account of the premium subsidies exchange enrollees receive. The government uses that information to determine that the subsidy amounts are correct (although a pending Supreme Court case raises questions about the legality of any subsidies offered through the federal exchange). Enrollees using the wrong information when filing their taxes would make it impossible for the government to verify that they got the right amount of subsidies.

Government officials will now try to remedy their mistake by sending out new forms to the affected customers. These tax documents contained the wrong price for the ‘benchmark plan’, the second-lowest cost silver plan available that is used to calculate the exchange subsidy amount. A post on the blog explains that the erroneous forms included the benchmark plan premiums for 2015 instead of 2014, which led to the wrong subsidy amount being displayed on the forms people use to file their taxes. The errors are not confined to one area, so incorrect forms were sent throughout the country, making it harder for enrollees to know if they are affected. Those given the wrong form will be able to access their corrected one sometime in early March, according to the report. 50,000 people in this group have already filed their taxes using the incorrect tax information. Officials are now in the process of trying to contact this group, and they will likely have to resubmit their tax returns. Enrollees who already filed will not find much help at for now, which only reads: “Additional information will be provided shortly.” Overall, nearly one million exchange enrollees could see delays in getting their income tax refunds, or find that their size of the refund has changed due to corrections in the tax form. Many of these people depend on this tax refund, and unanticipated problems could have significant adverse consequences.

Filing taxes is already a cumbersome and aggravating process. Obamacare has made it even more arduous as people have to attest to having health insurance coverage and how much they receive in exchange subsidies. Even worse, it nearly one in five customers was sent the wrong forms, and these people will have to delay filing their taxes, or even resubmit them. While this blunder will not cause the law to spiral out of control, it does reveal the potential for ongoing problems with its implementation. Following the news, CEO Kevin Counihan told reporters “We’re not doing any victory laps.” Other Obamacare supporters should take this lesson to heart.

Bipartisan Baloney About Top 1 Percent Income Gains

In the State of the Union address on January 20, President Obama said, “those at the top have never done better… Inequality has deepened.”  The following day, Fox News anchor Brett Baier said, “According to the work of Emmanuel Saez, a professor at the University of California, Berkeley, during the post-recession years of 2009-2012, top earners snagged a greater share of total income growth than during the boom years of 2002-2007. In other words, income inequality has become more pronounced since the Bush administration, not less.” 

Senator Bernie Sanders agrees that “in recent years, over 99 percent of all new income generated in the economy has gone to the top 1 percent.”  And Senator Ted Cruz likewise confirmed that, “The top 1 percent under President Obama, the millionaires and billionaires that he constantly demagogued earned a higher share for our income than any year since 1928.” 

When any statistic is so politically useful and wildly popular among left-wing Democrats and right-wing Republicans you can be pretty sure it’s baloney.  Bipartisan baloney.

In November 2013, I wrote that, “Because reported capital gains and bonuses were…shifted forward from 2013 to 2012 [to avoid higher tax rates], we can expect a sizable drop in the top 1 percent’s reported income when the 2013 estimates come out a year from now. The befuddled media will doubtless figure out some way to depict that drop as an increase.” As predicted, the New York Times took one look at a 14.9% drop in top 1% incomes and concluded that “The Gains from the Recovery are Still Limited to the Top One Percent” That involved slicing the same old baloney very badly.

Failing to Clean Up the VA

The Department of Veterans Affairs (VA) has a long history of mismanagement. Last year, the public became aware of a wait-time scandal at the VA hospital in Phoenix. Veterans were forced to wait months for appointments, even as the hospital was reporting no delays in service and allowing its management to receive performance bonuses. Over 1,700 veterans were not placed on the official wait lists to hide the length of actual waits. The VA Inspector General suggested that the Phoenix VA was not the only center to modify its wait lists in this fashion.

In response to the crisis, Congress passed a  law that allowed veterans who were waiting for treatment to access non-VA providers. At the time, I cautioned about the risk of a possible large, unfunded entitlement program being created. Now it seems that there are other issues with the way that the VA is implementing the expanded program. Veterans continue to be shut out of service and providers are uncertain how to utilize the benefits.

The Washington Post reports:

The card gives veterans who have been waiting more than 30 days for appointments or who live more than 40 miles from a VA facility the chance to see a private doctor.

But instead, some veterans say that when they attempted to use their card, the VA told them they had to live more than 40 “miles in a straight line, or as the crow flies,” from their VA rather than Google maps miles, which makes the card harder to use. Several VA doctors e-mailed The Washington Post saying they themselves don’t understand how to use the program

Another reader wrote in saying that her stepfather, Charles Schuster, who died in 2009, recently received a card in the mail, a symbol of an agency still seemingly in disarray. “Gave me a good laugh,” she wrote.

So far, 27,000 veterans have made appointments for private care with their cards, the VA said last week. It’s a fraction of the 9 million veterans who depend on the delay-plagued VA health-care system, the largest network of health centers and hospitals in the country.

“As far as I can tell, the choice card has created more confusion and aggravation than improving access to clinical care, though it did gain political points,” said one VA primary care doctor, who says he’s on the front lines of doing intakes. He spoke on the condition of anonymity because VA employees are not allowed to speak to the media without permission. But he said he and other doctors “are confused by the choice card system and don’t understand how to implement it.”

The article  documents other instances of veterans being unable to utilize their choice cards.

The VA hospital system is a mess, showing the downsides of socialized health care. During last year’s scandal, Congress simply put a bandage on the problem by allowing some veterans to use outside providers. Congress should revisit the issue and institute more fundamental reforms to the Veterans Health Administration.

Hayek vs. Government Health Care

In “The Use of Knowledge in Society,” economist F.A. Hayek described how markets take into account an array of local knowledge that governments do not possess. It is “knowledge of the particular circumstances of time and place,” which enters into everyday exchanges, but central authorities cannot access it. That’s because it “never exists in concentrated or integrated form but solely as the dispersed bits of incomplete and frequently contradictory knowledge which all the separate individuals possess.” This sort of knowledge is tacit and subjective, so “by its nature cannot enter into statistics and therefore cannot be conveyed to any central authority in statistical form.”

Cato adjunct scholar Jeff Singer is a surgeon practicing in Phoenix, and his op-ed today in the Wall Street Journal illustrates Hayek’s point. The federal government has mandated that health providers adopt electronic records to the specifications of the central planners in Washington. A theme in Jeff’s piece is that there is tacit and localized aspects of his practice that the government did not know about, and did not bother to find out about, before it imposed its top-down rules.

Governors Love Federal Funding

ObamaCare gives states the option to expand Medicaid to cover all individuals below 138 percent of the federal poverty level, which is approximately $33,500 a year for a family of four. To encourage states to expand, the federal government agreed to fund 100 percent of expenditures for the newly-eligible participants until 2016, and then slowly decrease the match to 90 percent in 2020 and into the future.

Democratic and Republican governors alike are showing their penchant for “free” federal dollars by supporting expanded Medicaid roles in their state. Republicans governors—who often say they dislike Obamacare—are in many cases pushing their legislatures to expand Medicaid to take advantage of this windfall.

GOP Governor Bill Haslam in Tennessee announced that he would support Medicaid expansion. His administration promoted the plan by saying, “Insure Tennessee will leverage the enhanced federal funding which will pay for between 90 and 100 percent of the cost and in doing so will bring federal tax dollars Tennesseans are already paying back to the state.”

To help minimize the state’s contribution and maximize federal funding, Haslam decided to expand the state’s health provider tax. Under a provider tax, a state agrees to increase Medicaid reimbursements to the providers paying the tax, such as hospitals. The higher reimbursement level draws a higher federal contribution. So state politicians and hospitals win, but federal taxpayers lose.  

In this case, luckily, Tennessee’s legislature denied Haslam’s  expansion attempts.

King v. Burwell: In 2013, Nelson Admitted He Didn’t Know if the ACA Offered Subsidies in Federal Exchanges

The plaintiffs in King v. Burwell claim the Patient Protection and Affordable Care Act only offers premium subsidies, as the statute says, “through an Exchange established by the State.” Members of Congress who voted for the PPACA – most recently Sen. Bob Casey (D-PA) and former Sen. Ben Nelson (D-NE) – now swear it was never their intent to condition Exchange subsidies on state cooperation.

Ironically, Casey’s and Nelson’s decision to wade into the King debate demonstrates why, when a statute is clear, courts traditionally assign no weight to what members of Congress claim they intended a law to say – especially if, as here, those claims come after a clear provision has proven problematic. While he claims he never intended to condition subsidies on states establishing Exchanges, Casey repeatedly voted to condition Exchange subsidies on state cooperation, has misrepresented what Congress intended the PPACA to do, and continues to misrepresent the PPACA on his Senate web site. Nelson’s claims about what Congress intended should likewise be taken with a grain of salt. In an unguarded moment in 2013, Nelson admitted that in 2009 he paid no attention to “details” such as whether the PPACA authorized subsidies in federal Exchanges.

All Sides Agree: Casey Supported Conditional Exchange Subsidies

Casey and Nelson exchanged correspondence exactly one day before amicus briefs supporting the government were due to be filed with the Supreme Court. Casey asked for Nelson’s recollection of whether, in 2009, Nelson or anyone else suggested the PPACA’s subsidies would only be available in states that established Exchanges. Perhaps more than anyone, Nelson was a pivotal figure in the debate over the PPACA. Not only did he insist on state-based Exchanges rather than a national Exchange run by the federal government, his was the deciding vote that enabled the bill to pass the Senate and become law – and he withheld his vote until his demands were met.