Tag: individual mandate

A Startling Development on the ObamaCare Front

The U.S. Court of Appeals for the 5th Circuit — the court that would hear any appeal of the Texas v. Azar decision overturning the entire Patient Protection and Affordable Care Act (ACA) — has just issued a request that does not bode well for ObamaCare.

In NFIB v. Sebelius, Chief Justice John Roberts reasoned the Supreme Court could view the ACA’s otherwise-unconstitutional individual mandate as a constitutional use of the Taxing Power. See my criticisms of Roberts’ reasoning here. In Texas v. Azar, a district-court judge ruled that since Congress zeroed-out the individual-mandate penalty, the courts could no longer uphold the mandate as a use of the Taxing Power, ergo the ACA must fall.

I oppose the ACA but disagree strongly with Texas v. Azar. At the time, I wrote, “federal judge Reed O’Connor did exactly what Chief Justice John Roberts did at the high court: jettison the rule of law to achieve a politically desired outcome.”

In an interesting twist, President Trump decided not to defend the ACA but instead to embrace the district court’s ruling, thereby depriving the overturned statute of its most obviously legally cognizable appellant — the government. Fortunately for the ACA, several states and the House of Representatives appealed the lower-court ruling to the 5th Circuit. Which brings us to yesterday’s development.

Yesterday, the 5th Circuit asked the states and the House (1) to justify why they have standing to appeal the lower-court ruling, (2) to explain, if they do not, whether the court can even hear an appeal of that ruling, and if not (3) what they think should happen then. See the court’s language below.

The request could mean the ACA and its would-be intervenors could have a harder slog than anyone thought. It means at least one judge on the 5th Circuit panel is skeptical that the court can even hear this appeal in its current form.

I think a higher court should, and ultimately will, overturn the lower court’s ruling in Texas v. Azar. But there are rules. Courts need a legitimate case or controversy in order to act. Today, it became less certain that they will.

The probability that Texas v. Azar will stand may have only risen from 0.5 percent to 5 percent, but I never would have thought it would reach even that high.

For more, see Nick Bagley.

Vermont Creates Its Own Individual Mandate (Penalties to Be Set Later by Bureaucrats)

From the St. Johnsbury, Vermont Caledonian Record:

On May 28 Gov. Phil Scott signed a bill to impose an individual mandate on all Vermonters to have state-approved health insurance. The mandate takes effect in 2020. A working group will recommend the necessary penalties for non-compliance by November.

The United States Congress eliminated the penalty tax for not having government–approved ObamaCare health insurance. So the governor and legislative leaders believe they must impose some kind of state penalty to prevent healthy people from departing the individual market insurance pool.

Who are the healthy? Primarily our young people.

And why must they be forced, on pain of penalties, to buy what for them is seriously overpriced health insurance? Because our state government doesn’t want to have to raise tax dollars to subsidize the far higher premiums of older and sicker people.

After all, why raise taxes to make a state insurance scheme work, when the government can simply force young healthy people to pay for the subsidies for their grandparents?

It’s not as if twenty-somethings are richer than sixty-somethings. They aren’t. Most of them are starting out in their working life at the lower end of the pay scale, often paying off college debts, maybe starting a family and trying to buy a home.

No matter. Our government will cheerfully hammer them to hold down the premiums for people who are near the top of their earning careers, have already raised their kids, and paid off their mortgages…

A Democratic legislature passed a sweeping Individual Health Effort Tax mandate in 2005. Republican Gov. Jim Douglas vetoed it. Here’s what the penalty menu was: “Individuals who are not otherwise covered, and who refuse to participate in the Plan, will be sanctioned by some combination of denial of motor vehicle registration, drivers’ license, homestead property tax exemption, hunting and fishing licenses, and enrollment in any school or college in the state.”

We can’t wait to see a legislator – or a Governor – try to explain this to a room full of young voters.

HT: Ethan Allan Institute founder and vice president John McClaughry.

Could It Be Unconstitutional to Raise the Obamacare “Tax” for Not Purchasing Health Insurance?

As many predicted, especially us at Cato, the Affordable Care Act is beginning to make health insurance less affordable for many Americans. Part of the problem, in a nutshell, is precisely what my colleague Michael Cannon described in 2009, the young and the healthy avoiding signing up for health insurance and choosing to pay the fine, or, as Chief Justice John Roberts would call it, a tax.

MIT economist Jonathan Gruber, often described as an architect Obamacare, recently said that some of these problems can be alleviated by increasing the “tax” on those without insurance. “I think probably the most important thing experts would agree is we need a larger mandate penalty,” said Gruber.

Depending on how high the penalty goes, there could be a constitutional problem with that. In the opinion that converted the “penalty” into a constitutional “tax,” Chief Justice Roberts described the characteristics of the “shared responsibility payment” that made it, constitutionally speaking, a tax rather than a penalty. One of those characteristics is that the penalty was not too high: “for most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more. It may often be a reasonable financial decision to make the payment rather than purchase insurance, unlike the ‘prohibitory’ financial punishment in Drexel Furniture.” In Drexel Furniture, also known as the Child Labor Tax Case, the Court struck down a 10 percent tax on the profits of employers who used child labor in certain businesses. One reason the Court struck it down was because its “prohibitory and regulatory effect and purpose are palpable.”

When Exchanges Collapse, ObamaCare Penalizes You Even If Coverage Is Unaffordable

MIAMI, FL - NOVEMBER 02: Martha Lucia (L) sits with Rudy Figueroa, an insurance agent from Sunshine Life and Health Advisors, as she picks an insurance plan available in the third year of the Affordable Care Act at a store setup in the Mall of the Americas on November 2, 2015 in Miami, Florida. Open Enrollment began yesterday for people to sign up for a 2016 insurance plan through the Affordable Care Act. (Photo by Joe Raedle/Getty Images)

In opeds at Time and National Review Online, I discuss how ObamaCare’s health-insurance Exchange has collapsed in Pinal County, Arizona, throwing some 10,000 residents out of their ObamaCare plans. Charles Gaba of ACASignUps.net and Cynthia Cox of the Kaiser Family Foundation asked me to explain a claim I make in the NRO piece:

Obamacare will still penalize those residents if they don’t buy coverage — even if the amount they must pay increases tenfold or more.

Before I explain, let me first apologize on behalf of the Affordable Care Act’s authors for the complicated mess that follows.

ObamaCare’s individual mandate penalizes taxpayers who fail to purchase health insurance. But there are so many exemptions that of the 33 million or so people who lacked insurance in 2014, the IRS levied the penalty against only 6.6 million tax filers (which actually represents a larger number, maybe 17 million people).

For example, the Affordable Care Act exempts “individuals who cannot afford coverage” from the penalty. You qualify for this exemption if your “required contribution” exceeds roughly 8.13 percent of your household income. For individuals who don’t have access to a suitable employer plan, the “required contribution” is equal to “the annual premium for the lowest cost bronze plan available in the individual market through the Exchange in the State in the rating area in which the individual resides,” minus “the amount of the credit allowable under section 36B for the taxable year (determined as if the individual was covered by a qualified health plan offered through the Exchange for the entire taxable year).” In other words, if you would have to pay more than 8.13 percent of your income for an ObamaCare plan, even after accounting for premium subsidies, then coverage is unaffordable for you and ObamaCare doesn’t penalize you for not buying coverage.

You would think this exemption would somehow apply to the 10,000 residents of Pinal County, for whom coverage will become dramatically more expensive when the Exchange collapses. If those folks are like Exchange enrollees in the rest of the country, the vast majority of them (85 percent or so) receive premium subsidies. When their Exchange coverage disappears next year, so will those subsidies. If they wish to purchase coverage off the Exchange, they will face, for the first time, the actual cost of ObamaCare coverage. Given that the amount Pinal County residents will have to pay for ObamaCare coverage could rise by several multiples, from a fraction of the premium to the full premium, given that the lowest-income enrollees will see the largest increases, given that the large year-to-year rate increases occurring nationwide will only add to the suffering, you would think the ACA’s unaffordability exemption would somehow cover those 10,000 Pinal County residents. But you would be wrong.

A Long-Overdue Conversation about How to Replace ObamaCare

With the prospect of a Republican president who could conceivably repeal and replace ObamaCare, it is time for ObamaCare opponents to take a hard look at their “replace” plans. As I have argued elsewhere, expanding health savings accounts – a proposal I call Large HSAs – beats other alternatives like health-insurance tax credits. In short, if opponents succeed in repealing ObamaCare, Large HSAs would take another step in the direction of a market system. Health-insurance tax credits would constitute a step backward, because they would simply resurrect some of ObamaCare’s worst features–including an individual mandate and much of ObamaCare’s government spending and redistribution.

I set off a kerfuffle last week when I wrote that Sen. Marco Rubio’s (R-FL) ObamaCare replacement plan contains an individual mandate in the form of tax credits for health insurance. Rubio supporters and others were none too pleased. 

On Health Care, Walker and Rubio Offer ObamaCare-Lite

In today’s Manchester Union-Leader, I explain the eerie resemblance that the health care plans advanced by presidential candidates Gov. Scott Walker (R-WI) and Sen. Marco Rubio (R-FL) bear to ObamaCare:

The centerpiece of both “replace” plans is a refundable tax credit for health insurance. Yet such tax credits already exist, in Obamacare. Also like Obamacare, the Walker/Rubio tax credits would allow Washington to decide how much coverage you purchase, penalize you if you don’t buy that government-defined plan, and conceal massive redistribution of income under the rubric of tax cuts…

How would Walker and Rubio pay for their new spending? Would they keep Obamacare’s tax increases? Raise taxes elsewhere? Would they finance new health care spending by cutting existing health care programs? If so, chalk up yet another way their plans would resemble Obamacare.

I also provide an alternative for reformers who actually want better, more affordable, more secure health care.

Conservatives can offer a better “replace” plan that is politically feasible by expanding a bedrock conservative initiative: health savings accounts, or HSAs, which have already enabled 14.5 million Americans to save more than $28.4 billion for their medical expenses tax-free.

Expanding HSAs would give workers a $9 trillion effective tax cut, without cutting spending or increasing the deficit, and would drastically reduce government control over Americans’ health decisions. Most important, “large” HSAs would spur innovations that make health care better, cheaper, and more secure — particularly for the most vulnerable.

Conservatives need to get this right, lest they repeat the same mistake they made in 1993-94.

For decades, prominent conservatives advocated an individual mandate. The left then picked up the idea and gave us Obamacare. Before they once again fall into the same trap, conservatives should drop any support for the implicit mandate of health-insurance tax credits. Expanding HSAs is more compassionate and provides a direct route toward freedom and better health care.

For more on Large HSAs, see here, here, and here.

How to Repeal ObamaCare through the Same Process that Gave Us ObamaCare

From my latest at Darwin’s Fool:

Republicans won an impressive number of victories last night, including a larger and more conservative House majority and enough wins to give the GOP at least a 52-seat majority in the Senate. As Jeffrey Anderson and Robert Laszewski have noted, Republicans made ObamaCare a major issue in the election  (the New York Times’ denials notwithstanding). Senate Republicans will fall several seats short of the 60-vote super-majority needed to overcome a Democratic filibuster of an ObamaCare-repeal bill, though. ObamaCare opponents are therefore debating whether and how Republicans could repeal some or all of the law via the Senate’s “budget reconciliation” process, which allows certain legislation to pass the Senate with only 51 votes. Some opponents have proposed getting around these difficulties by getting rid of the filibuster entirely. I think there’s a more prudent, targeted way Republicans could put ObamaCare repeal on the president’s desk, give Democrats a taste of their own majoritarian medicine, and convince Senate Democrats of the virtues of restoring the filibuster on legislation and judicial nominations.

It goes like this…

Read the whole thing.

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