What Delaying Obamacare Means

What Delaying Obamacare Means
July 16, 2013

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)

Consumer Power Report #381

The conversation in Washington, DC this week centers on delaying and defunding Obamacare. It focuses on these prospects because of a tactical error on the part of President Barack Obama and his administration: an assumption that they could get away with a wave-of-the-hand rewriting of his signature domestic policy without negative legal or political ramifications. Nancy Pelosi may deny it is even happening, but the ramifications are plain to see.

Within the next few weeks, the House will vote on defunding and delaying Obama’s law. These steps are part of a strategy aimed at achieving repeal, teeing up votes in the fall that will press the issue even further.

House Budget Committee chairman Paul Ryan (R., Wis.) is backing leadership’s proposal to hold votes next week on delaying the employer and individual mandates in Obamacare. Delaying the mandates will help Republicans achieve their ultimate goal of repealing the law altogether, he tells National Review Online.

“We should have these votes, and members of Congress should make their positions clear,” he says. “I think most conservatives in the House think having these delay votes are helpful to getting rid of the law entirely. These mandates are sort of the entire core of the law.”

Last week, the Obama administration announced its decision to unilaterally delay the health-care law’s employer mandate until 2015, conveniently beyond the upcoming mid-term elections. The law’s controversial individual mandate, perhaps its most central provision, remains on track to take effect in 2014. House Speaker John Boehner (R., Ohio) told reporters Thursday the House would vote next week on a one-year delay of the employer mandate – essentially providing legislative approval for the president’s unilateral decision – as well as a one-year delay of the individual mandate.

But these votes alone are not the most important result of the administration’s decisions. By choosing to delay the employer mandate alone, the administration may have given individuals the legal standing to challenge the legal basis for enforcement, as David Rivkin notes:

By suspending the Affordable Care Act’s employer insurance mandate, however, the president has potentially given millions of Americans the necessary standing to challenge his conduct. This is because the Affordable Care Act is a highly integrated law, with many of its key provisions dependent on each other. In addition to the employer mandate, the law also contains an “individual mandate,” requiring most Americans to sign up for a required level of health-insurance coverage or pay a penalty.

The individual mandate was one of the core parts of the Affordable Care Act considered by the Supreme Court in the 2012 case of NFIB v. Sebelius, where the court upheld the statute against constitutional attack. Throughout that litigation, the Obama administration portrayed the individual mandate as an “integral part of a comprehensive scheme of economic regulation” that included the employer insurance mandate, which was intended to give millions of Americans a way of meeting their new obligation to have health insurance. In other words, suspending the employer insurance mandate prevents the individual insurance mandate from working the way Congress intended.

Like the employer mandate, the individual mandate by law will take effect in January 2014 (unless the president postpones that as well). Individuals who will then have to buy their own health insurance will arguably have suffered an injury sufficient to give them standing to sue. Once in court, these litigants can argue that the very integrated nature of the Affordable Care Act would make it unlawful to apply one part against them, while suspending another section. They can also argue that only Congress can determine whether, once a statute is fundamentally changed post-enactment, it should survive or fall.

This is no small thing, as the issue of business owners battling uncertainty raised by this flagrant disregard of the law was likely to get a court’s attention. It’s possible the administration could effectively delay these penalties until after the midterms and then flip the switch, demanding retroactive reporting requirements and penalties (all the administration has really said is that they won’t enforce the reporting requirements … yet). Of course, Republicans suing to require the employer mandate’s implementation won’t exactly make business owners very happy. But the Supreme Court never explicitly ruled on the severability of the individual mandate – it ignored that issue and took a somewhat weaselly path on severability in the Medicaid case. It strikes this non-lawyer as a difficult argument that these two most recent steps are somehow severable from the rest of the enterprise.

What the White House has really handed Republicans is an opportunity to go full-on populist and beat the individual mandate, the least popular aspect of the law, with a sledgehammer. These upcoming votes will make for good public arguments. But given that none of these efforts is going to pass, the votes Republicans attempt against Obamacare should attempt to highlight its failings and respond to where the American people actually are, as opposed to where we might like them to be. A mere 12 percent of Americans back the individual mandate taking effect in 2014. Attacking major struts of the law to highlight their worst aspects and failings is the best approach. This is a matter of optics – so the more in the weeds Republicans get, the less useful their efforts are, especially when the majority of Americans now just want to return to the pre-Obamacare system. Most Americans are unsure what’s coming, worried it will make their premiums go up and force them to change doctors and plans. So Republicans should repeatedly offer votes highlighting why these fears are correct, picking targeted wedge battles that put Obamacare supporters in a bind without committing conservatives to any particular long term policy – that policy debate will happen in 2016, not now.

-- Benjamin Domenech


IN THIS ISSUE:


LONG-TERM IMPACT OF THE MANDATE DELAY

The American Action Forum runs through the results of delay:

Most of the long-term consequences result from the fact that the Administration has not really suspended the employer mandate (Section 1513 of the Affordable Car Act) as such – instead, they have suspended the data reporting requirements (Sections 1502 and 1514 of the ACA, or equivalently Sections 6055 and 6056 of the Internal Revenue Code). Those data reporting requirements apply not only to employers, but also to insurance companies, and anyone else providing health coverage. Only the requirements on employers are necessary to enforce the employer mandate – but both entire sections are being suspended. Without that information, it will also be impossible to enforce the individual mandate as well, since the IRS will not be able to prove that any particular individual does not have health insurance. So, the individual mandate is likely to be suspended also – regardless of the outcome of the votes Speaker Boehner has called for.

It will also be impossible to reliably determine who is entitled to premium subsidies in the exchanges, and even who is eligible to obtain insurance through exchanges in the first place. The Administration has “dealt” with this issue not by suspending the exchanges and the subsidies, but rather by issuing a regulation instituting an “honor system” in which a person becomes eligible simply by “attesting” that he or she is eligible.

The combined effect of these changes will be to transform the health coverage landscape in a completely different way than was envisioned when the ACA was passed, with the result being a substantial collapse of employer-sponsored health coverage (dumping employer health plans is, as Doug Holtz-Eakin puts it, “on sale”) – something which could not be easily be rebuilt the following year if the employer mandate is imposed then. However, even for people who think employer-sponsored health coverage is nonsensical, this is not something to celebrate, because it would be replaced by something even worse. The reason? In the exchanges, the premium one pays is independent of health status – which means if you are relatively healthy can you simply wait until you “need” coverage, and buy it then without paying a higher premium. In the meantime – which could be a very long time – you’ll have saved a lot by not paying a premium. Most people will save far more than it would cost to pay the individual mandate penalty – and in any case that is most likely delayed for at least a year, and might well turn out to be unenforceable even after that.

SOURCE: American Action Forum


LABOR UNIONS: THIS OBAMACARE DEAL IS GETTING WORSE ALL THE TIME

Whoops:

Last Thursday, representatives of three of the nation’s largest unions fired off a letter to Harry Reid and Nancy Pelosi, warning that Obamacare would “shatter not only our hard-earned health benefits, but destroy the foundation of the 40 hour work week that is the backbone of the American middle class.”

The letter was penned by James P. Hoffa, general president of the International Brotherhood of Teamsters; Joseph Hansen, international president of the United Food and Commercial Workers International Union; and Donald “D.” Taylor, president of UNITE-HERE, a union representing hotel, airport, food service, gaming, and textile workers.

“When you and the President sought our support for the Affordable Care Act,” they begin, “you pledged that if we liked the health plans we have now, we could keep them. Sadly, that promise is under threat … We have been strong supporters of the notion that all Americans should have access to quality, affordable health care. We have also been strong supporters of you. In campaign after campaign we have put boots on the ground, gone door-to-door to get out the vote, run phone banks and raised money to secure this vision. Now this vision has come back to haunt us.”

The union leaders are concerned that Obamacare’s employer mandate incentivizes smaller companies to shift their workers to part-time status, because employers are not required to provide health coverage to part-time workers. “We have a problem,” they write, and “you need to fix it.”

“The unintended consequences of the ACA are severe,” they continue. “Perverse incentives are causing nightmare scenarios. First, the law creates an incentive for employers to keep employees’ work hours below 30 hours a week. Numerous employers have begun to cut workers’ hours to avoid this obligation, and many of them are doing so openly. The impact is two-fold: fewer hours means less pay while also losing our current health benefits.”

What surprises me about this is that union leaders are pretty strategic when it comes to employee benefits. It was obvious in 2009 that Obamacare’s employer mandate would incentivize this shift. Why didn’t labor unions fight it back then?

More on this issue here. And here.

SOURCE: Forbes


CALIFORNIA INSURANCE COMMISSIONER WARNS OF ‘REAL DISASTER’ FROM OBAMACARE FRAUD

Worries abound:

As California prepares to launch its health care exchange, consumer groups are worried the uninsured could fall victim to fraud, identity theft or other crimes at the hands of some of the very people who are supposed to help them enroll.

The exchange, known as Covered California, recently adopted rules for a network of more than 21,000 enrollment counselors who will provide consumers with in-person assistance as part of the federal Affordable Care Act. In some cases, they will have access to personal and financial information, from ID cards to medical histories.

But the state insurance commissioner and anti-fraud groups say the exchange is falling short in ensuring that the people hired as counselors are adequately screened and monitored.

Insurance Commissioner Dave Jones also said the exchange does not have a plan for investigating any complaints that might arise once the counselors start work. That means consumers who might fall prey to bogus health care products, identity theft and other abuses will have a hard time seeking justice if unscrupulous counselors get hold of their Social Security number, bank accounts, health records or other private information, he said.

SOURCE: Sacramento Bee


TOP 5 MOST LUDICROUS TAXPAYER-FUNDED OBAMACARE PROMOTIONS

A useful list:

1. Coffee Cup Sleeves. Oregon may begin printing Obamacare notices on coffee cup sleeves so everyone is aware of the great “opportunity” for higher premiums. Lisa Morawski, a spokeswoman for the Oregon Health Insurance Exchange said, “That’s what we’re thinking right now for getting to those hard-to-reach populations.”

2. “Modern Family” Plot Revisions. California has signed a $900,000 contract with a public relations firm to market the state Obamacare exchange. One proposal is to write about the exchange in plotlines for primetime shows.

3. Airplane Banner Ads across Beaches. Federal dollars provided through exchange grants in Connecticut will pay for beach flyovers advertising Obamacare ...

4. … and Customized Sunscreen That Says “Get Covered.” Access Health CT, the official state health insurance exchange will even be at Sailfest, a southeastern Connecticut event that attracts more than 300,000 people annually, to promote their exchange.

5. Porta-Potty Ads. Washington’s health exchange is promoting itself to young people in the music-loving state with outreach at concerts and music festivals. Michael Marchland, who does communications for the exchange said, “We’ve talked about everything we could use, even whether we could do some branding on porta-poties.”

Funding Bourbon festivals? That’s simply unfair!

SOURCE: American for Tax Reform


FOURTH CIRCUIT’S LIBERTY RULING DEALS A HIDDEN BLOW TO OBAMACARE

Interesting:

Obamacare had a rough day in court yesterday. In Liberty University v. Lew, the Court of Appeals for the Fourth Circuit ruled against Liberty University’s challenge to various aspects of the law. One might think, as SCOTUSblog reported, this was a victory for the Obama administration. In the process, however, the Fourth Circuit undercut three arguments the administration hopes will derail two lawsuits that pose an even greater threat to Obamacare’s survival, Pruitt v. Sebelius and Halbig v. Sebelius.

The plaintiffs in both Pruitt and Halbig claim, correctly, that Obamacare forbids the administration to issue the law’s “premium assistance tax credits” in the 34 states that have refused to establish a health insurance “exchange.” The Pruitt and Halbig plaintiffs further claim that the administration’s plans to issue those tax credits in those 34 states anyway, contrary to the statute, injures them in a number of ways. One of those injuries is that the illegal tax credits would subject the employer-plaintiffs to penalties under Obamacare’s employer mandate, from which they should be exempt. (The event that triggers penalties against an employer is when one of its workers receives a tax credit. If there are no tax credits, there can be no penalties. Therefore, under the statute, when those 34 states opted not to establish exchanges, they effectively exempted their employers from those penalties.)

The Obama administration has moved to dismiss Pruitt and Halbig on a number of grounds. First, it argues that those penalties are a tax, and the Anti-Injunction Act (AIA) prevents taxpayers from challenging the imposition of a tax before it is assessed. Second, the administration argues that the injuries claimed by the employer-plaintiffs are too speculative to establish standing. Third, shortly after announcing it would effectively repeal the employer penalties until 2015, the administration wrote the Liberty, Pruitt, and Halbig courts to argue that the delay should (at the very least) delay the courts’ consideration of those cases. In Liberty, the Fourth Circuit rejected all of those claims.

SOURCE: Cato Institute


OBAMACARE EXCHANGE CONTRACTOR TARGET OF MAJOR FRAUD INVESTIGATION

Not good:

Last week, The New York Times reported that the Obama Administration over the Independence Day holiday quietly awarded “a contract worth as much as $1.2 billion” to Serco, a British company, to help develop the federal insurance exchange. Now comes word from London that Serco is one of two companies under investigation by British authorities for overbilling government contracts.

Britain’s Lord Chancellor, Chris Grayling, made a statement in Parliament on Thursday about a “wholly indefensible and unacceptable state of affairs” and indicated that the over-charges may have begun nearly 15 years ago: “The audit team is at present confirming its calculations, but the current estimate is that the sums involved are significant and run into the low tens of millions of pounds in total, for both companies, since the contracts commenced in 2005. The audit shows that the overcharging began at least as far back as the commencement of the current electronic monitoring contracts in 2005. It might even date back as far as the previous contracts let in 1999.”

Even as the integrity of Serco’s contracting work has come into question in Britain, the Obama Administration could pay Serco billions to verify the integrity of individuals’ exchange applications. As the Times reported: “Serco will help the Obama administration and states determine who is eligible for insurance subsidies, in the form of tax credits, and who might qualify for Medicaid. … Serco will also help the administration decide who is entitled to exemptions from the tax penalties that can be imposed on people who go without health insurance starting next year.”

This billion-dollar contract represents a glaring contradiction in terms – a company under investigation for inaccurate, and potentially fraudulent, bills in Britain being asked to verify the accuracy of Americans’ applications for federal exchange subsidies. Particularly given that the Administration also announced it will rely on the “honor system” for individuals to self-report income to the exchanges next year, this development raises even more concerns about the potential for rampant fraud in Obamacare programs.

SOURCE: The Heritage Foundation


OBAMACARE FOR HIPSTERS

How are they promoting the president’s signature law? With hipster jingles:

Cover Oregon, the public agency set up to implement Oregon’s health exchange under the Patient Protection and Affordable Care Act, launched the first, $3.2 million ad campaign last week for the program.

Rocky King, Executive Director of Cover Oregon, told the Oregonian, the goal of the jingly, somewhat hipster-vibe ads that offer lyrics stating “live long in Oregon” and “long live the Oregon spirit,” is to just break people into the program that opens in October.

And Oregonians might need more than a catchy song. A recent poll found 42 percent of Americans don’t realize Obamacare is law.

Cover Oregon does have a website with more information and, reportedly, more information is coming. The health exchange opens for enrollment in October and officials say they expect 217,000 participants in 2014. Oregon has 12 insurance carriers signed up to sell in the individual market and eight in the small employer market.

But with the initial ads by local singers Laura Gibson and Matt Sheehy, some are already confused, including commentors on Facebook and Twitter.

SOURCE: NW Watchdog.org

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)