Affordable Care Act
Let’s put aside for a minute that ObamaCare is unconstitutional, adds $6.2 trillion in debt, piles on countless new taxes, and has already racked up $31 billion and 71.5 million hours in regulatory compliance costs. Yes, that’s a lot to put aside. But for just a moment assume the role of a liberal with an entitlement mentality. For a law with enormous riches and political capital invested in it, wouldn’t you expect it to at least function on its most basic level consistent with its namesake? In other words, you would expect for the Affordable Care Act to provide affordable coverage.
The latest of ObamaCare’s fundamental flaws to be euphemistically reported as a “glitch” that needs to be “tweaked” is its failure to provide affordable family coverage for a broad group of employees. As a result, Kaiser Family Foundation estimates that 3.9 million family dependents may not be able to afford employer-sponsored family coverage or receive subsidized coverage on an ObamaCare exchange.
Understanding the family glitch requires a quick primer on the byzantine regulatory structure governing Obamacare’s subsidies:
There is some more bad news for ObamaCare. According to a recently released report from the Government Accounting Office (GAO), the Patient Protect and Affordable Care Act (PPACA) — President Obama’s signature domestic policy achievement — could cost taxpayers dearly in the long-term if cost-savings measures don’t work as intended.
The report, which was requested by Sen. Jeff Sessions (R-AL), who is the ranking Republican on the Senate Budget Committee, explains that the “effect of PPACA on the long-term fiscal outlook depends largely on whether elements designed to control cost growth are sustained.”
“Overall, there was notable improvement in the longer-term outlook after the enactment of PPACA under our Fall 2010 Baseline Extended simulation, which, consistent with federal law at the time the simulation was run, assumed the full implementation and effectiveness of the costcontainment provisions over the entire 75-year simulation period,” noted the GAO. “In contrast, the long-term outlook in the Fall 2010 Alternative simulation worsened slightly compared to our January 2010 simulation. This is largely due to the fact that cost-containment mechanisms specified in PPACA are assumed to phase out over time while the additional costs associated with expanding federal health care coverage remain.”
The baseline scenario is used by the government budget officials to determine the the cost effects of current law. However, the alternative scenario gauges budget implications based on past behavior of Congress, such as its proclivity for bypassing scheduled Medicare payments to doctors (also known as the “doc fix”).
Seemingly in response to this letter from Chairmans Darrell Issa (R-CA) and Dave Camp (R-MI) on January 29 to the Treasury and IRS, on February 1, the IRS again finalized the Obamacare subsidy regulations that flagrantly deviate from the statutory authority. This issue continues to simmer relatively under the radar since I last wrote about it in August. To refresh everyone’s memory, Obamacare’s core redistributionist provisions are its refundable premium tax credits and cost sharing subsidies available for individuals to purchase coverage on state exchanges starting in 2014. The credits will be available to anyone with annual income under 400% of the federal poverty line who isn’t covered under an employer-sponsored plan. To put that in perspective, a family of four today earning up to $92,200 per year would be eligible for the credits.
Federal Exchanges Excluded
Here’s the kicker: Obamacare specifically limits these credits and subsidies to individuals who purchase coverage on an exchange established by the state. Below is the actual, unambiguous provision from PPACA [emphasis added]:
This is the second of three posts on the primary consumer-driven health care arrangements under the current Internal Revenue Code.
The first post on consumer-driven health care discussed the health FSA, a useful but ultimately flawed vehicle hampered primarily by the use-it-or-lose it rule and ObamaCare limits. This post discusses the HRA, a more dynamic arrangement that can be used in many creative and powerful ways - pending a number of ObamaCare changes that will dramatically limit the HRA’s versatility.
As stated in the first post, the ideal consumer-driven health care vehicle should strive to achieve three main objectives:
- Provide incentive for the individual to spend less on health expenses;
- Maximize the individual’s flexibility in contributions and ownership of all assets contributed; and
- Limit the individual’s financial exposure by including an out-of-pocket maximum
What is an HRA?
A health reimbursement arrangement (HRA) is a creature of Sections 105 and 106 of the Internal Revenue Code. It’s an entirely employer funded account used to pay for health care expenses on a tax-free basis. Employers can structure HRAs to offer many benefits, including:
- Direct reimbursement for medical expenses as the primary form of health coverage;
- A way to pay for deductibles and other out-of-pocket expenses from major medical coverage;
- As an account to pay for the premiums for major medical coverage; or
- Any combination of those purposes
This versatility, as well as a few other key advantages over the health FSA, have made the HRA a commonly used employer-sponsored plan since 2002 when IRS guidance first blessed the HRA concept.
We are now only a month into the President Obama lame duck-era, yet the post-election deluge of Obamacare regulations is already well underway. Clearly, these regulations were completed prior to the election, withheld to prevent any political blowback. This should come as no surprise. Here’s a quick rundown of the latest expansive entries into the Federal Register:
Essential Health Benefits (77 FR 70644, November 26, 2012)
Obamacare lists ten broad categories of health benefits as essential health benefits (EHB), to be defined in detail by the Secretary of Health and Human Services (HHS). Secretary Kathleen Sebelius has instead put this burden on the states. States are to choose a benchmark plan to serve as the framework for EHB in that state. The states that refuse will have a default benchmark plan assigned to them. Individual health policies sold on state or federally facilitated exchanges (referred to as qualified health plans, or QHP) must actually provide these EHB. For employer sponsored group health plans, only non-grandfathered plans that are insured in the small group market must provide EHB. Any grandfathered, large market, or self-funded group health plan does not need to provide EHB, but they cannot impose any lifetime or annual limits on the dollar value of EHB. Welcome to Obamacare.
We heard it on the floor of the House of Representatives yesterday from Rep. Tom Graves (R-GA). He made it very clear to his fellow members that the vote to repeal ObamaCare was a “vote to stop the IRS.”
That proclamation was true for two reasons. First, the IRS was given authority to enforce ObamaCare’s individual mandate and the collect the fines imposed on Americans who don’t purchase health insurance coverage. The IRS has also far exceed its statutory authority by imposing fines on businesses that don’t offer coverage to employees in states that rejected the insurance exchanges. Those points by themselves are concerning enough.
The second point is that the IRS official who oversaw the office that dealt with tax-exempt organizations during the time the agency was discriminating against Tea Party groups is now leading the office responsible for ObamaCare:
Sarah Hall Ingram served as commissioner of the office responsible for tax-exempt organizations between 2009 and 2012. But Ingram has since left that part of the IRS and is now the director of the IRS’ Affordable Care Act office, the IRS confirmed to ABC News today.
Just a few moments ago, the House of Representatives passed H.R. 45, which would repeal the Patient Protection and Affordable Care Act — more commonly known as “ObamaCare” — by a 229 to 195 vote. An earlier motion by House Democrats to recommit the legislation to committee failed, 190 to 230.
Rep. Tom Graves (R-GA) described the vote to repeal as a “vote to stop the IRS,” a reference to the agency’s targeting of Tea Party groups and the new authority it has been given under ObamaCare.”
“The chief enforcers of this law – the IRS – have been outed as partisan political operatives. They’ve harassed and bullied and suppressed the political opponents of the Obama Administration,” said Graves from the floor of the chamber. “Now they want to be in charge of our health care? Give me a break. I don’t think so.”
“Members, this is your chance. This is your chance to weigh in on the IRS scandal,” he added. “A vote to repeal is a vote to stop the IRS.”
Unfortunately, it’s unlikely that the Senate will take up the ObamaCare repeal measure, despite their recent string of serious concerns with the law, including worries about rising insurance premiums and poor implementation efforts by the administration. President Barack Obama has promised to veto any measure that repeals the increasingly costly law.
If you’ve listened to pundits over the last couple years, you’ve no doubt heard them say that the Tea Party, a grassroots movement that was essential to Republicans taking control of the House in the 2010, doesn’t have the influence that it once had. But the IRS scandal that has plagued the White House this week has placed new emphasis on the dangers of big government that were the central focus of the Tea Party and, as Sean Sullivan explained this morning at the Washington Post, it could breathe new life in the movement:
A product of frustration with the government’s direction — specifically the Obama administration’s decisions on spending, taxes and the creation of the federal health-care law — the tea party was angst channeled into activism. Now comes another moment of widespread frustration, if a smaller one, with the potential to incite a new round of advocacy.
Even as the tea party sentiment is not as widespread as it once was, the ideology underlying the movement remains a force in Congress. Look at the House, where an unruly conservative GOP conference has caused headaches for leadership. The House will hold yet another vote on a repeal of Obamacare on Thursday, an effort designed in part to satisfy freshmen lawmakers who want the vote on their record.
There are yet more concerns coming from Senate Democrats over ObamaCare and its implementation. Over the last few weeks, members of President Barack Obama’s party have expressed concerns about the law’s affect on insurance premiums and Sen. Chuck Schumer (D-NY) partly blamed ObamaCare for the increased costs to the insured.
According to Reuters, Sen. Ron Wyden (D-OR) is just the latest member to relay concerns about rising premiums as a result of the law he supported when it came up in the chamber back in 2010:
While Obama and his administration say they are working nonstop on reform, analysts believe a poor performance could make the Patient Protection and Affordable Care Act a big enough campaign issue in 2014 to jeopardize Democratic control of the Senate - particularly if insurance costs rise sharply.
“There is reason to be very concerned about what’s going to happen with young people. If their (insurance) premiums shoot up, I can tell you, that is going to wash into the United States Senate in a hurry,” said Senator Ron Wyden, an Oregon Democrat.
Some Democrats are frustrated about the lack of details surrounding administration plans to promote the exchanges.
More than three years after it was signed into law, ObamaCare remains unpoplar with Americans, according to the latest tracking poll from the Kaiser Family Foundation.
“Overall, the public remains as divided as ever when it comes to their overall evaluations of the health law,” stated the Kaiser Family Foundation, which does a monthly tracking poll of ObamaCare. “This month, 35 percent report a favorable view, 40 percent an unfavorable view, and a full 24 percent report they have no opinion on the law, continuing a recent trend of particularly high shares not offering an opinion.”
While it’s still vigorously defended by the Obama Administration, the poll notes that only 57% of Democrats have a favorable view of the law, which is low, while 67% of Republicans have an unfavorable view.
The poll also shows that a majority of Americans support efforts to alter or prevent ObamaCare. “In terms of the law’s political future, just over half of Americans (53 percent) continue to say that they approve of efforts by opponents to change or stop the law ‘so it has less impact on taxpayers, employers, and health care providers,’” noted the Kaiser Family Foundation. “One in three (including more than half of Democrats) believe that the law’s opponents should accept that it is the law of the land and stop trying to block its implementation, down somewhat from January (33 percent now compared to 40 percent at the start of the year).”
Interestingly, the poll found that some 40% of Americans don’t even know that ObamaCare is still law and still being implemented by the administration.