Tag: obamacare repeal

Threat to ObamaCare Is No ‘Drafting Error’

It turns out that ObamaCare makes an essential part of its regulatory scheme—an $800 billion bailout of private health insurance companies—conditional upon state governments creating the health insurance “exchanges” envisioned in the law.

This was no “drafting error.” During congressional consideration of the bill, its lead author, Sen. Max Baucus (D-MT), acknowledged that he intentionally and purposefully made that bailout conditional on states implementing their own Exchanges.

Now that it appears that as many as 30 states will not create Exchanges, the law is in peril. When states refuse to establish an Exchange, they are blocking not only that bailout, but also the $2,000 per worker tax ObamaCare imposes on employers. If enough states refuse to establish an Exchange, they can effectively force Congress to repeal much or all of the law.

That might explain why the IRS is literally rewriting the statute. On May 24, the IRS finalized a regulation that says the law’s $800 billion insurance-industry bailout will not be conditional on states creating Exchanges. With the stroke of pen, the IRS (1) stripped states of the power Congress gave them to shield employers from that $2,000 per-worker tax, (2) imposed that illegal tax on employers whom Congress exempted, and (3) issued up to $800 billion of tax credits and direct subsidies to private health insurance companies—without any congressional authorization whatsoever.

Some supporters of the law claim that Congress never intended to give states the power to block ObamaCare’s insurance-industry bailout. No doubt there are many in Congress who held that position. But they lost. If they’re unhappy now, they should take it up with Max Baucus.

What they should not do is set a precedent where the IRS can, on its own discretion, tax one group and subsidize another to the tune of $800 billion.

For more, see Jonathan Adler’s and my forthcoming Health Matrix article, “Taxation Without Representation: The Illegal IRS Rule to Expand Tax Credits Under the PPACA,” which has been featured in The Wall Street Journal, The New York Times, The Washington Post, Politico, and NPR.

Wisconsin Health Secretary: ‘No Such Thing as a State-Run Exchange’

Dennis Smith directed the Medicaid program for President George W. Bush and was a health care analyst at the Heritage Foundation before becoming Wisconsin Gov. Scott Walker’s (R) secretary of health. The following excerpts are from a [subscription only] article at WisPolitics.com:

In his first extensive interview since a U.S. Supreme Court ruling largely upheld the federal law, the Department of Health Services chief said fed deadlines are likely to change and that the lack of guidance on setting up the exchanges makes any state-run exchange “a fantasy.”

Part of the reason why Smith says Wisconsin hasn’t moved forward with a health exchange plan is because he believes the deadlines will be pushed back.

“We have no other plan that we are taking because we think the reality is the federal government cannot meet its deadlines for implementing PPACA,” Smith said. “No one knows what a federal exchange looks like. The two major components that an exchange is supposed to do, which is determine eligibility and to complete the business transaction to pay premiums to health care plans that millions of Americans are supposed to pick, nobody knows what those look like. The administration has failed to release a credible business plan where objective observers could conclude that they’re going to pull this off.

Smith also said that none of the states currently setting up exchanges would likely meet federal regulations and that there’s “no such thing as a state-run exchange.”

“They were going to be asking for the resumes for the people who sit on the board of overseeing an exchange,” Smith said. “They were micromanaging the governance structure. They didn’t have to do that, they chose to do that. But that’s slowing the process and the decision making.”

The secretary especially pointed to questions on who will be eligible for the exchanges and the appropriate level of tax credits for participants. He claimed the rules on determining accuracy of tax credit payments were too “nonchalant,” and could result in the IRS having to recover thousands of dollars because of potential inaccuracies.

“It’s not that they don’t have answers because they’re withholding it from us, it’s that they don’t have answers because they don’t have answers,” Smith said. “These are critical policy issues, critical technical issues. Again, what are you building if you don’t know who’s eligible? What are you building if you don’t know what the flow is out of the treasury to the health plan?”

…”They have a mess on their hands,” Smith said… “You have to fundamentally say, ‘No, that just isn’t working, we have to go back to the drawing board.’

“And that is not being partisan in the slightest. That is facing reality.”

And that’s from a guy who continues to support the concept of a government-created health insurance exchange.

McConnell Had It Right: Government Should Not Pursue Universal Coverage

I’m a bit late to this party, but Senate Minority Leader Mitch McConnell (R) was of course right to tell Fox News’ Chris Wallace last weekend that the federal government should not pursue universal coverage:

Wallace: In your replacement [for ObamaCare], how would you provide universal coverage?

McConnell: Well, first let me say the single best thing we can do for the American health care system is to get rid of ObamaCare…

Wallace: But if I may sir, you talk about “repeal and replace.” How would you provide universal coverage?

McConnell: …We need to go step by step to replace it with more modest reforms…that would deal with the principal issue, which is cost…

Wallace: …What specifically are you going to do to provide universal coverage to the 30 million people who are uninsured?

McConnell: That is not the issue. The question is, how can you go step by step to improve the American health care system…

Wallace: …If you repeal ObamaCare, how would you protect those people with pre-existing conditions?

McConnell: …That’s the kind of thing that ought to be dealt with at the state level…

Naturally, the Church of Universal Coverage caught the vapors. But Time’s Mark Halperin says McConnell’s stance, while embarrassing, is “not a politically dangerous place to be”:

McConnell would have seemed less evasive and could have stopped Wallace in his tracks had he said, “We will not pursue universal coverage because that causes more people–not fewer–to fall through the cracks in our health care sector.”

‘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.

“Conservatives’ Last Legal Option to Invalidate Obamacare”

The New Republic reports on an issue that Jonathan Adler and I have been highlighting: an IRS rule that will tax employers and subsidize private health insurance companies without congressional authorization. Why would the IRS issue such a rule? Perhaps because ObamaCare could collapse without it.

The post quotes another law professor who acknowledges the Obama administration faces a serious problem:

“It’s fairly decent textual case,” says Kevin Outterson, a professor at Boston University Law School, and health care blogger for The Incidental Economist. And if it stood, he says, the consequences could be disastrous.

Disastrous for ObamaCare, that is. But as Adler and I have written previously, if  saving ObamaCare means letting the IRS tax employers without congressional authorization, then ObamaCare is not worth saving.

Obamacare’s Unconstitutional—-Let’s Implement! No Wait, We’re Not Implementing—-Yes We Are!

The Washington Post reports:

For 14 months, a bipartisan group of 17 states has been quietly collaborating with the Obama administration to help build a foundation for the health-care reform law’s success.

The group includes some of the law’s staunchest supporters working alongside a handful of its bigger detractors. They are backed by $3 million in funding from eight nonprofit organizations that hope to see the Affordable Care Act succeed.

Together, they have come up with a tool to help consumers navigate the health insurance exchanges—the marketplaces that each state is required to have by 2014.

In other words, at the same time Alabama, Arizona, Colorado, and Kansas are suing to overturn Obamacare as unconstitutional, officials in those states are helping to implement the same unconstitutional law.

The Post reports, without rebuttal, several myths about the states’ role under Obamacare. It refers three times to the “tight deadlines” states face under the law. (There are no deadlines. HHS has said that if states decline to create exchanges, they can change their minds later.) It claims, “If a state does not have a framework in place by 2013, the Department of Health and Human Services will come in and do the job itself.” (That’s highly questionable. Obamacare appropriates zero funds for federal exchanges and HHS has admitted it doesn’t have the money.) It quotes Kansas insurance regulator Linda Shepphard as saying, “There is no work being done to build an exchange in Kansas at this point.” (Well, which is it? Is Kansas doing “no work,” or is it “collaborating with the Obama administration”?) I’d say certain state officials got some ‘splaining to do.

In the video below the jump, I explain to state officials why flatly refusing to create an Obamacare exchange is the best thing they can do for their states.

States Should Flatly Refuse to Create ObamaCare Exchanges (New Cato Video)

This new Cato Institute video explains why it is in no state’s interest to create an ObamaCare Exchange.

Many thanks to Cato’s very talented Caleb O. Brown and Austin Bragg.

For the more-words-no-pictures version, click here or here. For a word about ObamaCare profiteers the pro-Exchange lobby, click here. Click here to read about what is happening in the states.