United Liberty

Last week, Senators Orrin Hatch (R-UT) and Lamar Alexander (R-TN) introduced the American Job Protection Act to repeal the ObamaCare employer mandate (a.k.a. the pay or play rules, or the employer “shared responsibility” rules).  Companion legislation was also introduced in the House on the same day.  Full text of the bill is available here.

As FreedomWorks reignites the movement to defund ObamCare in the House as we near the end of the CR on March 27, the American Job Protection Act offers a strong second front against one of ObamaCare’s most damaging provisions.  Sadly, full repeal is not politically feasible right now.  But that doesn’t mean we can’t keep trying to chip away at its more unpopular provisions through bills like this.

It’s Been Done Already
Let’s not forget that we’ve already repealed some of the nastier programs and mandates in prior legislation.  As nicely summarized in this post on Forbes by Grace-Marie Turner, the law’s government takeover of the long-term care industry called the CLASS Act, a major piece in the original legislation, is now history.  Other chunks now out for scrap include the burdensome $600 1099 reporting requirement and the odd employee free choice voucher, which would have allowed certain employees to apply their employer health plan contribution to the cost of coverage on the ObamaCare exchange.

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”).

“Congress should be cutting spending, reducing the regulatory burdens that are crushing the economy — freedom works, and it is time we put it back to work.” — Rep. Tom McClintock (R-CA)

Just a couple of days after President Barack Obama laid out his agenda for the next year in his State of the Union address, I sat down with Rep. Tom McClintock, a Republican who represents California’s Fourth Congressional District, to get his thoughts on the proposals being pushed by the White House, the Senate’s refusal to pass a budget, ObamaCare, and a few other issues.

On the State of the Union, Rep. McClintock, who has been among the staunchest defenders of economic freedom and the Constitution in Congress, was dismissive of President Obama’s agenda. “[W]e heard this song before,” he noted. “I think that his words have to be measured against the last four years of his deeds.”

He rhetorically asked, “What have been his policies? Higher taxes, much higher spending, out of control deficits, crushing business regulations. And what have those policies produced? Family take home pay has declined over these past four years, the unemployment rate is higher than when we started — it would be much higher except for the millions of Americans who have given up even looking for work.”

“What did he propose? More of the same,” Rep. McClintock stated. “Taking bad policy and doubling down on it doesn’t make it good policy.”

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 third and final post on the primary consumer-driven health care arrangements under the current Internal Revenue Code.

As stated in the prior posts discussing the health FSA and HRA, the ideal consumer-driven health care vehicle should strive to achieve three main objectives:

1) Provide incentive for the individual to spend less on health expenses;

2) Maximize the individual’s flexibility in contributions and ownership of all assets contributed; and

3) Limit the individual’s financial exposure by including an out-of-pocket maximum.

The HRA is the only vehicle to effectively meet all three.

What is an HSA?

The health savings account (HSA) is the closest thing to the holy grail when it comes to applying free market principles and consumerism to modern health coverage.  HSAs are governed by Section 223 of the Internal Revenue Code.  And it’s one powerful Code section.  HSAs are triple tax-advantaged: contributions are made on a pre-tax basis (by payroll deduction) or tax deductible (above the line), funds held in the account grow tax-free, and distributions for qualified medical expenses are tax-free.  That’s as good as it gets.  The HSA is not perfect, but it is a solid foundation for a true consumer-driven model of health reform.

The basic premise of the HSA is to provide a tax-advantaged account to pair with a high deductible health plan (HDHP).  The HDHP is structured to leave a risk corridor that you’re responsible for paying, and the HSA is structured as a way to fund that risk corridor.  The HDHP will pay for some basic preventive services, but everything else will be subject to the high deductible before it’s covered.  If you incur expenses up to the extent of the deductible, you can (but don’t have to) use your HSA reimburse those costs.  The HDHP also has an out-of-pocket maximum to limit your financial liability.

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:

1. Provide incentive for the individual to spend less on health expenses;
2. Maximize the individual’s flexibility in contributions and ownership of all assets contributed; and
3. 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.

The Good

Yesterday, President Barack Obama delivered his inaugural address, symbolically beginning the start of his second term in office (he was actually sworn in on Sunday in a private ceremony, per constitutional requirements).

The ceremony was filled with the usual pomp and celebration that we’ve come to know with presidential inaugurations. Hundreds of thousands descended on the Mall in Washington to watch Obama take his oath and listen to his second inaugural address. Many stuck around to watch the inaugural parade, which went on into the evening.

The celebration, as Doug Mataconis explains, “places far too much of an air of monarchism around the Presidency.” Seeing the lengths we take to celebrate one branch of our government — one that is supposed to have only as much power as the legislative and judicial branches — is ridiculous; not to mention incredibly costly. But I digress.

For all of the celebrating that took place in Washington yesterday, President Obama’s inaugural address left much to be desired.

It was a well-delivered speech, but there wasn’t much there on substance. While he talked about the unifying, there was nothing in the speech that came even close to hinting that Obama is ready to work with Republicans in Congress. He couldn’t have delivered that message any clearer.

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.

After listening to ten days of hand wringing and doom saying from the usual suspects that Republicans must abandon our principles if we are to survive, we need a little of Mark Twain’s common sense.  I suggest we all take it to heart.

He said, “We should be careful to get out of an experience only the wisdom that is in it — and stop there; lest we be like the cat that sits down on a hot stove-lid. She will never sit down on a hot stove-lid again — and that is well; but also she will never sit down on a cold one anymore.”

So it is in that spirit that I will begin with three incontrovertible truths about this election.

First, the same election that returned Barack Obama to the White House also returned the second largest House Republican majority since World War II - bigger than anything Newt Gingrich ever had.

Second, according to polls before, during and after this election, the American people agree with us fundamentally on issues involving the economy, Obamacare, government spending, bailouts - you name it.

Third, the American people are about to get a graduate level course in Obamanomics, and at the end of that course, they are going to be a lot sadder and a lot wiser.

That is not to say that there aren’t many lessons that we need to learn and to learn well from this election, particularly here in California.  But capitulation is not one of them.

Written by Michael F. Cannon, Director of Health Policy Studies at the Cato Institute. Posted with permission from Cato @ Liberty.

The Washington Post reports:

By the end of this week, states must decide whether they will build a health-insurance exchange or leave the task to the federal government. The question is, with as many as 17 states expected to leave it to the feds, can the Obama administration handle the workload.

“These are systems that typically take two or three years to build,” says Kevin Walsh, managing director of insurance exchange services at Xerox. “The last time I looked at the calendar, that’s not what we’re working with.”…

The Obama administration has known for awhile that there’s a decent chance it could end up doing a lot of this. Now though, they’re finding out how big their workload will actually become.