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, here, here, here, here, here, and here.
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.
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 Journal, USA 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.
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.
Those of us who may have had doubts about the health reform law were comforted by President Obama’s repeated assurances that, “If you like your health plan…you will be able to keep your health care plan. Period.” But, by dismantling and recasting the separate health insurance marketplaces that serve small employer groups and individuals in the District, D.C. policymakers would take away the option of keeping the health plan that they now have. Rather, to continue to offer health benefits to employees after 2013, small employers like us would have no choice but to go to an undefined, untested, more expensive entity to obtain coverage. Especially in these uncertain economic times, many employers, and their workers, must be given the time to adjust their budgets for the estimated price increases of the Exchange. In addition, many of us have long-established relationships with health insurers we know and are guided by broker advisors who understand our unique needs. We do not want to be forced to buy the standardized, cookie-cutter coverage that would be offered through a government-run Exchange...
Indeed, forcing all consumers seeking Individual or Small Group health coverage to go to the Exchange to purchase health plans runs counter to the ACA’s essential promise of more – not less – choice...The diversity of small employer health plans currently available in the District cannot be replicated in the standardized plans offered by the Exchange. Small employers rely on choice amongst a wide array of health plans available in the current commercial marketplace and the flexibility to design contributions to complement each employer’s unique budgetary and financial situations...With the many changes that will be required of employers of all sizes under the new federal health care reform law, it seems unreasonable to add to those concerns by eliminating the commercial marketplace which we know for an undefined, unfamiliar and untested Exchange-driven marketplace.
In addition, we cannot ignore the significant costs of administering the Exchange which will undermine one of the key goals of the federal law - affordability.
Signatories include such notorious right-wing groups as the Brady Center To Prevent Gun Violence:
- AIDS United
- Allen & Associates
- Alliance Insurance Services
- American Academy of Orthotists & Prosthetists
- American Association for Clinical Chemistry, Inc.
- American Bakers Association
- American Cleaning Institute
- American Council for an Energy-Efficient Economy
- American Immigration Lawyers Association
- American Insurance Association
- American Road & Transportation Builders Association
- American Society of Association Executives
- Andre Chreky, the salon spa
- Apartment and Office Building Association of Metropolitan Washington
- Ashcraft & Gerel LLP
- Association for Competitive Technology
- Association for Professionals in Infection Control and Epidemiology
- Axar Management
- Beacon Consulting Group, Inc.
- Blue House Design
- Brady Campaign and Brady Center To Prevent Gun Violence
- Brawner Management, LLC
- Building Owners and Managers Association International
- Capital Medical Associates
- Center for Constitutional Litigation, P.C.
- Center for Nonprofit Advancement
- CGH Technologies, Inc.
- Chef Geoff’s
- Columbia Lighthouse for the Blind
- Combined Properties, Incorporated
- Communications Development
- Consortium of Universities of the Washington Metropolitan Area
- David All Group
- DC Chamber of Commerce
- Development Gateway, Inc.
- Distilled Spirits Council
- Elizabeth M. Ross and Kenneth M.H. Lee, M.D., P.C.
- Entertainment Software Association
- Environmental Law Institute
- EOP Group, Inc.
- Euroconsultants, Inc.
- Federation of American Hospitals
- Good Neighbors, LLC
- Government Accountability Project
- Hemsley Fraser Group
- High Noon Communications
- History Matters
- Howard Eales, Inc.
- Howard W. Phillips & Co.
- ICI Mutual Insurance Company
- Innovators Network Foundation
- Interstate Natural Gas Association of America
- J. Todd Miller & Associates, Inc.
- Kaludis Consulting Group, Inc.
- Katz, Marshall & Banks LLP
- Knightsbridge Restaurant Group
- LimeLeap Solutions
- Marvin A. Address & Associates, Inc.
- McBride Real Estate
- McClendon Center
- MCLA Inc.
- Metro TeenAIDS
- Metropolitan Washington Road & Transportation Builders
- Miller & Shook Companies
- National Association for Gifted Children
- National Association of Health Underwriters
- National Association of Regulatory Utility Commissioners
- National Association of State Departments of Agriculture
- National Council for Interior Design Qualification
- National Customs Brokers & Forwarders Association
- National Mining Association
- National Propane Gas Association
- Navista, Inc.
- Pacific Cargoes
- Park Limited
- Passion Food Hospitality
- Radio Television Digital News Association / Foundation
- Regis & Asociates, PC
- Reiter & Hill
- Restaurant Association Metropolitan Washington
- RULG-Ukranian Legal Group, P.A.
- Sabin Vaccine Institute
- Society of Chemical Manufacturers & Affiliates
- Spiegel & McDiarmid LLP
- The Council for Responsible Nutrition
- The Episcopal Center for Children
- The Farm Credit Council
- The Ford Agency, Inc.
- The Gabriel Company, LLC
- The Prime Rib, Inc.
- Timothy A. Price, MD, PC
- Triad Communication / TRC Real Estate
- U.S. Grains Council
- U.S. Soccer Foundation
- United Fresh Produce Association
- Vinyl Siding Institute, Inc.
- Vogel, Slade & Goldstein, LLP
- Waterman and Associates
- Wenderoth, Lind & Ponack, L.L.P.
- Widmeyer Communications
- Appleseed Foundation
- Atelier Architects
- Bockorny Group
- Bond & Pecaro
- Bonner, Kiernan, Trebach & Crociata
- Bonstra Haresign Architects
- Capitol Process Services, Inc.
- Carr Workplaces
- Casey Trees
- Clement's Pastry Shop
- Communications Development Incorporated
- Computer World Services
- Colonnade Condos
- Environmental Design & Construction
- The Fund for American Studies
- Fund for Global Human Rights
- Futures Industry Association
- Hartman-Cox Architects
- Hecht, Spencer and Associates
- The Herald Group
- I. Gorman Jewelers
- International Center for Research on Women
- International Dairy Foods Association
- International Franchise Association
- James E. Brown & Associates, PLLC
- Jewish Primary Day School of the Nation's Capital
- Jewish Women International
- King Branson LLC
- Land Trust Alliance
- Law Resources
- MAG America
- Man-Machine Systems Assessment, Inc.
- McBee Strategic
- McBride Real Estate Services
- Medical Device Manufacturers Association
- Medical Society of the District of Columbia
- Metropolitan Engineering, Inc. | Shapiro – O’Brien
- National Institute of Building Sciences
- North American Millers' Association
- North American Securities Administrators Association
- Pascal & Weiss, P.C.
- Poker Players Alliance
- Potomac Communications Group, Inc.
- Public Properties
- Rust Insurance Agency, LLC
- Safety Net Hospitals for Pharmaceutical Access
- Salsa Labs
- Society of the Plastics Industry
- Springboard Enterprises
- Theodore Roosevelt Conservation Partnership
- The Washington Center for Internships and Academic Seminars
- Washington Partners, LLC
One might add the Center for Science in the Public Interest, whose president emeritus complains, "the only option the board publicly considered has been this unpopular and unnecessary plan to close the private marketplace to many businesses."
Secretary of Health and Human Services Kathleen Sebelius has been campaigning so enthusiastically for President Obama that she -- whoops! -- broke a federal law that restricts political activities by executive-branch officials. Federal employees are usually fired for such transgressions, but no one expects that to happen to Sebelius. Heck, she got right back in the saddle.
Every cabinet official (probably) wants to see the president reelected, and no president relishes dismissing a cabinet official. But in this case, there's an additional incentive for Sebelius to campaign for her boss and for Obama not to fire her.
ObamaCare creates a new Independent Payment Advisory Board that -- "fact checkers" notwithstanding -- is actually a super-legislature with the power to ration care to everyone, increase taxes, impose conditions on federal grants to states, and wield other legislative powers. According to legend, IPAB will consist of 15 unelected "experts" who are appointed by the president and confirmed by the Senate. Yeah, good one.
In fact, if the president makes no appointments, or the Senate rejects the president's appointees, then all of IPAB’s considerable powers fall to one person: the Secretary of Health and Human Services. The HHS secretary would effectively become an economic dictator, with more power over the health care sector than any chamber of Congress.
If Obama wins in November, he would have zero incentive to appoint any IPAB members. The confirmation hearings would be a bloodbath, not unlike Don Berwick's confirmation battle multiplied by 15. Sebelius, on the other hand, would not need to be re-confirmed. She could assume all of IPAB’s powers without the Senate examining her fitness to wield those powers. If Obama fired her, or the voters fire Obama, then the next HHS secretary would have to secure Senate confirmation. Again, bloodbath. That makes Kathleen Sebelius the only person in the universe who could assume those powers without that scrutiny.
No wonder she’s campaigning so hard. No wonder Obama won't fire her.
In Wednesday night's presidential debate, Mitt Romney claimed that ObamaCare's Independent Payment Advisory Board is “an unelected board that's going to tell people ultimately what kind of treatments they can have.”
President Obama officially denies it, yet he confirmed Romney's claim when he said, "what this board does is basically identifies best practices and says, let's use the purchasing power of Medicare and Medicaid to help to institutionalize all these good things that we do."
In this excerpt from his column in today's The Washington Post, George F. Will quotes my coauthor Diane Cohen and me to show that IPAB is even worse than Romney claimed:
The Independent Payment Advisory Board perfectly illustrates liberalism’s itch to remove choices from individuals, and from their elected representatives, and to repose the power to choose in supposed experts liberated from democratic accountability.Beginning in 2014, IPAB would consist of 15 unelected technocrats whose recommendations for reducing Medicare costs must be enacted by Congress by Aug. 15 of each year. If Congress does not enact them, or other measures achieving the same level of cost containment, IPAB’s proposals automatically are transformed from recommendations into law. Without being approved by Congress. Without being signed by the president.
These facts refute Obama’s Denver assurance that IPAB “can’t make decisions about what treatments are given.” It can and will by controlling payments to doctors and hospitals. Hence the emptiness of Obamacare’s language that IPAB’s proposals “shall not include any recommendation to ration health care.”
By Obamacare’s terms, Congress can repeal IPAB only during a seven-month window in 2017, and then only by three-fifths majorities in both chambers. After that, the law precludes Congress from ever altering IPAB proposals.
Because IPAB effectively makes law, thereby traducing the separation of powers, and entrenches IPAB in a manner that derogates the powers of future Congresses, it has been well described by a Cato Institute study as “the most anti-constitutional measure ever to pass Congress.”
Our paper is titled, "The Independent Payment Advisory Board: PPACA's Anti-Constitutional and Authoritarian Super-Legislature." It broke the news that, as Will writes, ObamaCare "precludes Congress from ever altering IPAB proposals" after 2017.