Freedom Line Blog

Does the Obama administration have a backup plan if the Supreme Court interprets ObamaCare according to its terms and prohibits federal subsidies to Americans in 36 states?

If so, top administrators at Health and Human Services, the Internal Revenue Service and Treasury aren’t sharing.

That lack of transparency – and the havoc it could wreck on millions of mandatory ObamaCare users – angers a group of powerful Senate Republicans.

“I want to make certain that the government has notified people who have signed up through the HHS insurance exchange – including the thousands of Georgians who were forced to enroll after ObamaCare cancelled their health plans – of the potential consequences of the Court ruling against the government, especially given the fact that the cost of the program could be significantly increased,” Senator Johnny Isakson (R-GA) said in a statement.

“The Obama administration needs to be forthcoming about its backup plans so my constituents can make their own backup plans.”

Isakson and other Republicans serving on the Senate Finance Committee sent a strongly worded letter to several government agencies demanding details of any contingency plans. In it they charge HHS Secretary Sylvia Mathews Burwell, Treasury Secretary Jacob Lew, and IRS Commissioner John Koskinen with “lack of candor” and “evad[ing] the issue when it was raised at hearings before the Committee this week.”

Consider this another unfulfilled promise of “the most transparent administration in history.”

If you can’t beat ‘em, join ‘em, and then fight like hell to save them.

That’s essentially the health insurance industry’s strategy when it comes to ObamaCare.

Unable to derail the Democrats’ health reform train in 2009 and 2010, most of the biggest players in the health insurance industry agreed to make peace with the Obama administration.

For their troubles the insurance companies won policy concessions like the individual mandate to ensure a captive market for their products, and a complicated bailout scheme to subsidize losses.

Then along came King v. Burwell, one of the cases challenging the legality of federal subsidies necessary to make ObamaCare plans affordable. (Necessary, but not, according to ObamaCare’s text, permitted in states that rely on the federal government’s insurance portal.)

The Supreme Court is set to hear oral arguments this spring, and many entities have submitted amicus or friend-of-the-court briefs to persuade the justices their way.

“Among those filing amicus briefs defending health reform are HCA, the American Hospital Association, America’s Health Insurance Plans, the National Alliance of State Health Co-ops, the Catholic Health Association of the United States, the American Cancer Society, and the National Association of Community Health Centers,” reports Bloomberg Business. “The insurance and medical industries share the administration’s goal of seeing millions more people covered because that translates into millions more customers seeking the services of carriers, hospitals, and doctors.”

If given a choice, many established businesses would prefer a guaranteed arrangement with the government rather than rely exclusively on the volatility of the market. It’s easy to see why. But discomfort to the health insurance industry should not trump the rule of law. If the IRS can rewrite ObamaCare to make money available where it has been prohibited, then perhaps another agency hence can also decide to cancel spending that is legally required.

No businessman wants to be on the wrong side of a one-way contract. Yet that’s precisely what will happen if the federal bureaucracy gets to change the terms of ObamaCare whenever it sees fit.

Avik Roy, a conservative health policy expert, penned a very helpful primer on the latest GOP ObamaCare alternative.

The plan – the Patient CARE Act – is an updated version of similar reform concepts presented last year by three leading Republican members of Congress.

Along with other intriguing ideas, the Patient CARE Act replaces ObamaCare’s restrictive subsidy system – i.e. the money can only be spent on federally-approved insurance plans – with “a means-tested tax credit that individuals could use to buy a far broader range of insurance products, or deposit the funds in a health savings account.”

As a tremendous service to readers, Roy also summarizes how the Patient CARE Act compares to other conservative health reform alternatives: his Transcending ObamaCare and one championed by the 2017 Project. All three are serious proposals and deserve attention.

More on these and other ObamaCare alternatives as they develop…

Here’s a look at the newest Republican alternative to ObamaCare.

According to the plan’s authors – Rep. Fred Upton of Michigan, plus Senators Richard Burr of North Carolina and Orrin Hatch of Utah – the plan would rein in Medicaid’s burgeoning costs by turning it into a block grant.

That’s not all.

Among other things, the Patient CARE Act would:

• Enact medical malpractice reforms to reduce frivolous lawsuits
• Require basic price transparency to inform and empower patients
• Cap the exclusion of an employee’s employer-provided health coverage
• Create a targeted tax credit to help buy health care

Billed as a “Bicameral Republican Blueprint,” this proposal has support from three powerful members of the GOP in Congress. Once they produce more details, then we’ll see how many votes they can muster.

Ladies and gentlemen, please welcome another politically-motivated ObamaCare delay to the stage!

Megan McArdle sums up the IRS’ decision to let those who received too much in ObamaCare subsidies last year get extra time to pay back the difference (called the law’s “clawback” provision).

“It’s not relieving you of the obligation to repay; it’s just saying that you won’t be liable for a penalty if you don’t repay by the deadline,” explains McArdle. “Interest will continue to accrue, but the interest rates that the IRS charges are actually pretty reasonable (and probably much better than what your credit card company charges). It’s the failure-to-pay penalties it layers on top – half a percentage point a month, with even stiffer penalties for failing to file – that really make your tax bill add up fast.”

That is, if the Obama IRS ever gets around to enforcing the parts of laws it doesn’t like. McArdle writes, “The IRS emphasizes that this is a one-time deal, just for 2014. But I’m not sure if you should believe it. This emphasizes one of the problems we’ve spoken about a lot in this space: The political will to impose the costs of the Affordable Care Act is a lot less strong than the will to distribute the benefits.”

The Republican establishment was once derided as the tax collector for the welfare state. If Obama and the Democratic Party can’t be bothered to administer both the costs and the benefits of their so-called health reform law, the GOP shouldn’t shoulder the burden of balancing its books.

Every politically-motivated delay in enforcing an aspect of ObamaCare is a tacit admission by its supporters that the law is unworkable in practice. Republicans should acknowledge the obvious and start afresh.

CGI Federal was the primary contractor responsible for building Healthcare.gov – the federal ObamaCare website that glitched its way into bureaucratic infamy.

In the aftermath, CGI was fired by the Department of Health and Human Services and a number of states holding similar contracts.

But like a vampire rising from the dead, CGI Federal is back in the ObamaCare game, and just in time for tax season!

That’s right, a Republican-led House subcommittee discovered that the IRS has hired CGI Federal to a $4.46 million contract. Recall that, under ObamaCare, the IRS must administer a complex income-reporting system to verify which taxpayers received too generous a subsidy.

This news was too much for the Wall Street Journal editorial page, which opined that, “Perhaps CGI is still able to obtain federal business because no one has ever been punished for the worst government technology failures since the Challenger explosion. The political class would prefer to forget, but a new audit from HHS Inspector General Daniel Levinson probes what he delicately calls ObamaCare’s ‘inadequacies in contract planning and procurement.’”

“According to the report,” the Journal continues, “HHS rarely obeyed the laws that govern outside hiring, such as competitive bidding and due diligence of past performance. The 33 contractors that contributed to the $800 million website reported to multiple managers and no one at HHS devised an ‘acquisition strategy’ – also required by statute – to integrate the various pieces.”

So if you are confused, frustrated or inappropriately fined by the IRS this tax season, rest assured that CGI Federal is somehow probably responsible – and making millions.

Republicans on both sides of Capitol Hill are busy strategizing for ways to minimize the political fallout if the Supreme Court invalidates health insurance subsidies for millions of people currently receiving them under ObamaCare.

The case, King v. Burwell, challenges the IRS’ decision to make insurance premium subsidies available to citizens of 34 states that do not have a state-run ObamaCare exchange. The policy is in direct conflict with ObamaCare’s text, providing the justices with a clear opportunity to hold the Obama administration to the letter of the law.

The Hill is reporting that Republican members of the House and Senate are discussing ways to be ready when and if an estimated 5 to 6 million Americans suddenly can’t afford to purchase mandated health insurance.

So far, no details have emerged regarding specifics. There is a lot to consider since any change in the law will require President Barack Obama’s signature. A complicating factor may be this president’s willingness to let the media portray Republicans and the Court as heartless conservatives, even though all that’s being asked for is the Obama administration to implement its own law as written.

Nothing new here.

On the flip side, it’s encouraging to hear that Republicans in Congress are trying to get in front of a potentially damaging issue by coalescing around an alternative they can sell to the public.

Hopefully this is the start of a welcome trend.

Think rationing health care spending has an effect of which patients doctors see?

A new study released by the New England Journal of Medicine found that Medicaid beneficiaries enjoyed a 7.7 percent bump in the number of appointments doctors scheduled with them when government reimbursement rates increased.

Unfortunately for the poor who use Medicaid, once ObamaCare’s temporary subsidy phased out, states didn’t have the extra money to continue the higher reimbursements to doctors.

And so, it’s likely that doctors will respond to the new (lower) price signal and cut back on the number of Medicaid patients they schedule.

From a policy perspective this study confirms that doctors respond to economic incentives, and that if we as a society are going to help the poorest of the poor get adequate health care Congress and the president need to start prioritizing federal spending so that there’s more money available to help those who need it.

If the folks in Washington, D.C. are looking for a place to start trimming, former U.S. Senator Tom Coburn’s (R-OK) “Wastebook 2014” is a good place to start.

“Have you been researching a chronic illness like coronary artery blockage? Do you shop online for smoking-cessation aids? Are you investigating genetic markers for a certain type of breast cancer? Are you seeking help for financial problems, or for an addiction?”

Those are just some of the information items potentially being collected on Healthcare.gov – the federal government’s ObamaCare website used by millions of Americans to shop for health insurance.

A report by the Associated Press confirmed that “dozens” of third party vendors like Google, Twitter and Facebook are gleaning personal data points from Healthcare.gov users. These can be sold to internet advertisers to market products directly to consumers who’ve searched for similar items.

The hidden presence of these websites drew concern from two cyber security experts interviewed by the AP, in part because tracking firms can piece together a user’s identity through IP addresses and patterns of behavior.

Once upon a time there was concern that hackers would find a way to access a person’s health and financial records through a weakness in Healthcare.gov. As it turns out, all they need to do is pose as an e-commerce vendor.

Marilyn Tavenner, the chief administrator of the Centers for Medicare and Medicaid Services (CMS), announced in an email last Friday to staff that she is stepping down at the end of February.

The move comes as something of a surprise, but the timing is similar to that of Tavenner’s former boss, Health and Human Services Secretary Kathleen Sebelius. Last year, Sebelius said she was leaving her post after ObamaCare’s initial enrollment period ended. Tavenner’s resignation is effective when the controversial health law’s second enrollment period concludes.

Tavenner’s time in office was marred by a glitch-ridden rollout of Healthcare.gov, the federal ObamaCare website that earned the ire of millions of Americans. She also came under fire for overstating ObamaCare’s enrollment figures by inaccurately including 400,000 dental plans that have never been counted toward health insurance numbers.

With Republicans in control of the Senate that will confirm Tavenner’s replacement, it will be interesting to see who President Barack Obama taps to fill her shoes.

Fresh from beating Democratic incumbent Mary Landrieu in a run-off last December, Republican Bill Cassidy is off to a fast start as a freshman in the U.S. Senate.

Making good on his campaign promise to get rid of ObamaCare, Cassidy, a physician, has introduced two bills within just weeks of taking office.

The “No ObamaCare Mandate Act” would repeal the medical device tax, the employer mandate and the individual mandate, according to a report in The Hill.

In addition, “The Employee Health Care Protection Act” would reduce benefit requirements in health insurance plans regulated by ObamaCare, giving providers more flexibility and consumers more options.

And apparently, Cassidy knows how to give a good speech. In defending the Keystone XL pipeline from ideologically motivated attacks by environmentalists, Cassidy said, “We are not to be guided by our prejudice. We’re not to be guided by what we want to be the case. We are to be guided by the facts.”

Usually, it’s liberals who claim the mantle of science and scold conservatives for being fearful of the truth. It’s good to see a conservative U.S. senator return the favor.

How important is the upcoming 2016 presidential election?

According to research by political scientist Jordan Ragusa, the most favorable time to repeal landmark legislation like ObamaCare occurs about ten years after its passage.

Since ObamaCare was passed in 2010, that means 2020 is the year repeal activity could be at its height.

Ragusa’s ten-year window is an average calculated over a fifty-year study of repeal efforts of major laws. In the context of ObamaCare, Ragusa’s timeline makes perfect sense. Republicans don’t have the supermajority in either chamber of Congress to override a certain veto from President Barack Obama. But if a Republican wins the presidency in 2016, all the GOP would need is a simple congressional majority to repeal any or all of ObamaCare.

Yes, it’s important for Republicans in Congress to get whatever wins they can muster now to weaken ObamaCare before it does more damage. But changes in partisan control take time. When ObamaCare was passed Democrats were in complete control of the political branches. The earliest Republicans could be in such a position is January of 2017.

It will also take time for the GOP to coalesce around a comprehensive alternative to ObamaCare, which, according to Ragusa’s data, shouldn’t be too much of a concern as long as a repeal-and-replace bill is signed into law before the Republican president’s first term expires.

There are a lot of considerations to keep in mind when it comes to securing a free market alternative to ObamaCare. Lack of time to do it right isn’t one of them.

Anyone still looking for a fundamental change to the federal tax code need look no further than ObamaCare.

H&R Block, one of the nation’s largest tax preparation companies, is promoting its free “ACA Tax Impact Analysis” on January 8, 2015, in order help taxpayers understand the true cost of ObamaCare.

Reporting by The Hill quotes an H&R Block executive as saying that the controversial health law is “the biggest tax code change” in two decades. Its passage “has made health care a tax issue and is going to make filing taxes more complicated this year.”

Perhaps the biggest surprise coming to millions of taxpayers is the penalty amount to be assessed for not complying with the law’s individual mandate. Most people know that the IRS can levy a $95 fine for being uninsured this year (which rises every subsequent year). But many do not realize that’s only one option. ObamaCare authorizes fines up to 1% of annual income (which also rises every year), if that amount is greater than $95.

Simply put, a lot of people who passed on ObamaCare’s costly version of “affordable” insurance thinking they would only have to write a $95 check may be missing a much bigger chunk of their IRS refund this year.

Hat tip to the Daily Caller for unearthing yet another damning admission from ObamaCare architect Jonathan Gruber.

At roughly the same time in 2009 when President Barack Obama was telling the American people that passing his version of health care reform would lower costs, Gruber was telling an audience in Syracuse, New York it was all a lie.

“Why are we closer than we’ve ever been before? Because there are no cost controls in these proposals. Because this bill’s about coverage. Which is good! Why should we hold 48 million uninsured people hostage to the fact that we don’t yet know how to control costs in a politically acceptable way? Let’s get the people covered and then let’s do cost control,” Gruber told his listeners.

Thanks for the honesty, Professor Gruber, but it only counts if you say it before the damage is done.

Vermont will not push forward with its plan to launch a state-based single payer health care system in 2017, reports the Daily Caller.

Democratic Governor Peter Shumlin made the announcement on Wednesday, citing several factors.

Among the most important were changes in financing assumptions. Vermont had been counting on infusions of federal funding to buoy the program, but confirmed that it overshot its estimates by a whopping $311 million. Without the expected seed money of federal tax dollars there’s not enough start-up capital needed to get the project going.

The other blow to Vermont’s single payer scheme – to be called Green Mountain Care – is its lack of financial sustainability. In order to make the enterprise successful, Vermont would need to levy tax hikes like an 11.5 percent payroll tax and an income tax up to 9.5 percent. Those changes would likely kill business development in the state, eroding the tax base necessary to pay for Green Mountain Care.

Though the time, money and effort poured into this failed experiment have been costly, it will hopefully serve as a reality check for government officials to abandon the impossible and instead focus on implementing tangible policies that can improve lives now.

Even though Jonathan Gruber did his best to apologize for his incredibly damaging – and seemingly accurate – remarks about how and why ObamaCare was drafted, there was no place to hide from the bipartisan rebuke he received today from the House Committee on Government Oversight and Reform.

Gruber is the now infamous MIT professor and erstwhile “architect” of Democrats’ signature health reform law that called American voters “stupid” for not understanding basic economics and the deceptive policies embedded in ObamaCare.

Gruber’s comments have incensed Republicans, but they’ve also infuriated Democrats. Of all the anger directed at Gruber today, perhaps none was more forceful than that erupting from Rep. Elijah Cummings of Maryland, the ranking Democrat on the committee.

“As far as I can tell, we are here today to beat up on Jonathan Gruber for stupid – I mean absolutely stupid – comments he made over the last few years,” Cummings said. “Let me be clear, I am extremely frustrated with Dr. Gruber’s statements” because “They were irresponsibly, incredibly disrespectful, and did not reflect reality. And they were indeed insulting.”

We’ll see if any of this theater persuades the Supreme Court. Next spring the justices consider whether a section of ObamaCare should be interpreted, as written, to deny subsidies to citizens in 37 states that use the federal health insurance exchange. It’s an interpretation that Democrats oppose, but Gruber in at least one viral video adamantly confirms.

It’s been said that a political gaffe occurs when someone says the truth in public. Regarding ObamaCare’s deceptive elements, that may be Jonathan Gruber’s greatest offense.

On Tuesday this week Jonathan Gruber, the MIT economist and ObamaCare architect made infamous by a series of viral videos confirming suspicions of deceptive lawmaking, will appear before the House Government Oversight and Reform Committee.

It won’t be a pleasant meeting for Gruber.

Committee chairman Darrell Issa (R-CA) has titled the hearing, “Examining ObamaCare Transparency Failures.”

The biggest issue will be whether Issa and his fellow Republicans can get Gruber to confirm his previous statement that ObamaCare only grants insurance subsidies to people in states that operate their own health exchange. That’s the central issue in the case going before the Supreme Court next spring, and if the justices accept it, much of ObamaCare could be gutted.

Liberals are already trying to get ahead of any Gruber confessions under oath that could undermine their landmark domestic policy.

In a long-read piece at Politico, a former Democratic staffer tries to minimize the impact of Gruber’s comments by first saying he wasn’t involved in the policymaking process. That’s a fair point.

But then the staffer seems to completely confirm Gruber’s main argument – that the disputed statutory language was deliberately concocted to confuse people who weren’t in on the backroom political calculations.

The Politico reporter sums up the staffer’s argument this way: “The point of having the ‘Balkanized’ approach – state health exchanges plus a federal one for states that didn’t build their own – was to appeal to centrist senators, he said, since most liberal Democrats would have been happy just to have a federal one.”

As the staffer explains it, “No one was willing to fall on their swords to make sure states ran their own exchanges.”

In other words, the text in the law that limits the flow of subsidies to state exchanges is nothing more than an Orwellian wordplay. It doesn’t mean what it says. Rather, it’s designed to give ‘centrist’ senators political cover for voting to do the exact opposite – give subsidies to everyone.

Confused? Gruber isn’t.

This new rationale sounds an awful lot like the “tortured” drafting of ObamaCare that takes advantage of the “stupidity of the American voter” that Gruber’s been saying for years.

Kudos for being honest. Now let’s see if he will remain so under oath.

For political junkies, the news that MIT professor and ObamaCare architect Jonathan Gruber has agreed to testify before the House Government Oversight and Reform Committee is must see TV.

Gruber has stirred up a hornet’s nest of negative press for the controversial health care law because of statements he’s made at academic conferences over the last few years. Helpfully summarized by the folks at American Commitment, Gruber’s comments include calling American voters stupid and admitting to writing ObamaCare’s text in a tortured way to avoid a straightforward cost estimate from the Congressional Budget Office.

Also appearing at the hearing will be Marilyn Tavener, administrator of the Centers for Medicare and Medicaid Services, to explain – presumably with a straight face – why revelations that ObamaCare’s reported enrollment of 7 million inexplicably counted 400,000 dental plans. Republicans suspect a bad faith face-saving move since without the incorrectly included dental plans enrollment would have failed to reach CBO’s benchmark estimate.

All in all, December 9, 2014 should be an entertaining day in Washington, D.C. – if you like to watch contentious oversight hearings.

Is anything the Obama administration says about ObamaCare worth believing?

“The Obama administration said it erroneously calculated the number of people with health coverage under [ObamaCare], incorrectly adding 380,000 dental subscribers to raise the total above 7 million,” reports Bloomberg.

The revelation came to light thanks to diligent work by House Oversight Committee investigators.

Bloomberg quotes Health and Human Services Secretary Sylvia Mathews Burwell as saying, “The mistake we made is unacceptable,” but the news agency goes on to report HHS may have been intentionally misleading in its counts in the run-up to the midterm elections.

“Federal officials said in September they had 7.3 million people enrolled in coverage through new government-run insurance exchanges. They didn’t distinguish between medical and dental plans, breaking from previous practice without notice.” (Emphasis mine)

Along with the Grubergate deceptions, it’s hard to believe that HHS did anything other the deliberately fudge the numbers to help ObamaCare (barely) meet a previous CBO projection. Falling below that threshold would surely have been an embarrassment to the Obama administration, so someone at HHS just changed the rules so the home team could win.

Sounds similar to the president’s approach to immigration, doesn’t it?

With its surprising decision to hear oral argument on an ObamaCare subsidy challenge next spring, the Supreme Court of the United States is causing a flurry of activity as some states try to shore up their status ahead of a potentially costly decision.

“The consulting firm Avalere Health estimates that nearly 5 million people would see their premiums spike 76 percent, on average, if the Supreme Court strikes down subsidies in states that don’t operate their own exchanges,” reports Governing. “That estimate assumes a greater number of exchanges are considered federal, not state-based, but the question of what exactly constitutes a ‘state-based’ health exchange is murky.”

How murky?

“States have the option of running their own exchange completely (a state-based exchange), managing aspects of plan design or consumer outreach (a partnership exchange) or leaving everything to the federal government (a federally facilitated exchange),” according to the website.

Predictably, the federal Department of Health and Human Services isn’t divulging its exact criteria for categorizing an exchange, a stance that leaves states without a clear picture of how to prepare for a possible elimination of subsidies to residents.

Some states, like Nevada and Oregon that switched to Healthcare.gov – the federal website – are still considered to have state-based exchanges because they retain control over functions like plan approval, data collection and quality reporting. Others, like Utah and Mississippi, also fall into the state-based category because they host small business exchanges (but not individual exchanges).

So, the bottom line appears to be this: If the Supreme Court axes ObamaCare subsidies per the law’s text and intent, there’s a good chance President Barack Obama’s political appointees will engage in verbal gymnastics to find ways to define “state-based exchanges” in whatever manner best suits them.

No matter. Getting something fundamentally better than ObamaCare isn’t the Supreme Court’s job anyway. Best to pocket the subsidy win if it comes and work toward a policy consensus among the political branches that delivers real reform.