Freedom Line Blog

Join CFIF Corporate Counsel and Senior Vice President Renee Giachino today from 4:00 p.m. CDT to 6:00 p.m. CDT (that’s 5:00 p.m. to 7:00 p.m. EDT) on Northwest Florida’s 1330 AM WEBY, as she hosts her radio show, “Your Turn: Meeting Nonsense with Commonsense.”  Today’s guest lineup includes:

4:00 CDT/5:00 pm EDT: Richard Morrison, Program Manager for the Competitive Enterprise Institute’s Center for Advancing Capitalism: Must Every Product in the World be Safe Enough for Children?; 

4:15 CDT/5:15 pm EDT: Dr. Tevi Troy, Senior Fellow at Hudson Institute and President of American Health Policy Institute: Stopping Ebola Before It Turns into a Pandemic;

4:30 CDT/5:30 pm EDT: Chris Edwards, Cato Institute’s Director of Tax Policy Studies and Editor of Downsizing Government.org: Fiscal Policy Report Card on America’s Governors, 2014;

5:00 CST/6:00 pm EDT:  Open Mic; and

5:30 CDT/6:30 pm EDT:  Megan Brown, Partner, Wiley Rein, LLP: SCOTUS October 2014 Term.

Listen live on the Internet here.  Call in to share your comments or ask questions of today’s guests at (850) 623-1330.

Could ObamaCare’s “risk corridor” program become the health insurance industry’s equivalent of Fannie Mae and Freddie Mac – the federally funded entities that spent $180 billion bailing out banks who issued subprime mortgages?

Stephen Moore, the chief economist at the Heritage Foundation, thinks so.

“But insurance experts warn that [the risk corridor] program creates the same moral hazard problem for health insurance that we saw in the mortgage market with Fannie Mae and Freddie Mac,” Moore writes at Investor’s Business Daily. “The guarantee on bad mortgages encouraged bad mortgages. The guarantee against losses on ObamaCare enrollees encourages insurers to toss sound underwriting standards out the window. This didn’t turn out so well with Fannie and Freddie, which received a taxpayer-funded bailout of more than $180 billion after issuing subprime mortgages that should never have been written.”

Moore goes on to say that surveys of health insurance companies selling plans on ObamaCare exchanges say that the vast majority expect to receive a payment from the federal government to cover their losses. Estimates for the first year near $1 billion. And, since there is no cap to how much the feds will reimburse, there is no limit to how much money a company can lose and still expect a check from Uncle Sam.

Despite all this, the Obama administration is chugging ahead with plans to make payments under the risk corridor program without explicit congressional appropriations. Republicans are contesting President Barack Obama’s authority to do this – with an assist from a recent GAO legal opinion – but they should really train their fire on eliminating the risk corridor program as is. As with IRS tax credits, ObamaCare can’t survive without a convoluted shell game that hides the true cost of health care.

We’ll never get health care policy right until we can talk honestly about how it’s funded. Now would be a good time for the GOP to being that process.

In an interview with CFIF, Steven Bucci, Director at the Douglas and Sarah Allison Center for Foreign and National Security Policy at The Heritage Foundation, discusses U.S. attempts to build a coalition to defeat ISIS, whether ground troops are necessary to destroy the terrorist organization and President Obama’s UN Security Council presence.

Listen to the interview here.

It’s been a rough couple of weeks for power-hungry bureaucrats.

Recently, the General Accountability Office (GAO) issued a report faulting the Centers for Medicare and Medicaid Services (CMS) for being unable to produce itemized spending documents, and thus not complying with federal audit guidelines.

This week, the non-partisan government watchdog agency issued a legal opinion saying CMS does not have the authority to bail out ObamaCare-aligned insurance companies, unless Congress agrees.

GAO’s non-binding but influential legal opinion was generated by a request from congressional Republicans concerned about a CMS announcement that it would use money appropriated for other activities to fund ObamaCare’s “risk corridor” program.

Risk corridors refer to a scheme within ObamaCare to compensate insurance companies who lose more than a specified amount of money covering high-cost patients. Initially, funds are redistributed from highly profitable companies. But if the losses exceed a certain threshold, federal taxpayers step in via CMS, the primary agency implementing ObamaCare.

With all of ObamaCare’s pricey mandates – most importantly “guaranteed issue,” which requires insurers to enroll customers with preexisting conditions – there is concern that significant losses among participating companies could put taxpayers on the hook to bailout several firms in the health insurance industry.

It’s worth noting that GAO released its legal opinion on the same day Federal District Judge Ronald A. White struck down a similar bureaucratic power grab by the Internal Revenue Service. While the timing is unconnected, the central issue is not. In both cases agencies within the Obama administration are attempting an end run around the plain meaning of a statute in order to make the president’s legacy program appear to work better than it is.

The rule of law is more important than avoiding bad press for a poorly written bill. Bravo to the GAO and Judge White for having the courage to hold the executive branch accountable.

A new report by Bloomberg Government indicates that Sylvia Burwell, the Secretary of Health and Human Services (HHS), gave a potentially misleading answer when she told Congress that Healthcare.gov – the federal government’s ObamaCare portal – cost taxpayers $834 million to build.

Nicole Kaeding at the CATO Institute teases out some of the unstated, but related, costs that balloon the overall price tag to $2.14 billion, far north of Burwell’s testimony.

I’ve summarized them here as bullet points:

• $300 million contract to process paper applications to serve as backups to electronic files

• $387 million for real-time interfacing between the IRS and Healthcare.gov to verify income and family size for insurance subsidy calculations

• $400 million in accounting tricks HHS used to pay for creating Healthcare.gov when 26 states refused to take federal start-up grants to build their own. Congress made no appropriations to build Healthcare.gov, so HHS shifted money from other units to fund the project.

• $255 million in spending between February 2014 – the end of Burwell’s timeline – and August 20, 2014, the most recent information available. Bloomberg also included projected spending at current levels through September 30, 2014, the end of the fiscal year.

These are the kinds of expenses that Members of Congress would expect the HHS Secretary to include when testifying about full cost of a program. The fact that Burwell gave a low-ball estimate when these figures were easily accessible to her or her staff weakens her credibility as an honest broker of information. As her departing colleague Eric Holder knows, once Congress loses its ability to trust a Cabinet official, the gloves come off.

Like clockwork, climate alarmists attributed Hurricane Sandy in 2012 to anthropogenic (man-caused) global warming.  In one typically irrational commentary, Paul Barrett equated global warming to steroids in its effect on the storm.

With that hyperbole and hysteria in mind, a Discovery Channel item this week provided appropriate humor.  Entitled “Thought Sandy Was Bad?  Revisit This 1821 Hurricane,” its historical piece offers beneficial perspective:

Remember all the hype about Hurricane Sandy being a ‘superstorm,’ a once-in-500-years convergence of meteorological nastiness?  According to a newly-published study by a Swiss insurance firm, Swiss Re, things could have been a lot worse.  Though the combination of factors that created Sandy was indeed unusual, Sandy wasn’t the most powerful storm that’s ever hit the U.S. East Coast.  That distinction probably belongs to the massive 1821 Norfolk and Long Island hurricane, which moved along the Mid-Atlantic before striking the New York/New Jersey coastline with wind speeds of 156 miles per hour.”

Too bad the alarmists weren’t around in 1821 to attribute causation to steam engine technology.  But perhaps contemporary alarmists can instruct us on how this only substantiates their ongoing charade.

If you purchase an ObamaCare plan in California, good luck trying to find a directory that matches your insurance policy with a specific doctor.

“Altogether, the 10 insurers in Covered California have contracted with an estimated 75% of California’s licensed physicians, or nearly 90% of those considered active in the state,” reports the Los Angeles Times. “However, many of those doctors are available in just one or two health plans.”

That is, if you can find them.

“There’s no timetable for a state provider directory after the exchange scrapped an initial version that was riddled with errors. Instead, Covered California refers people to insurance company websites that vary in usefulness,” says the paper.

The resulting anger and confusion has spawned almost 300 complaints to state regulators and two consumer lawsuits against some of the biggest insurance companies in California.

Doctors are getting hosed too, according to the report. “Insurers say they can pass along savings by paying doctors less and rewarding that select group with higher patient volume. It’s also hoped those doctors will take on a bigger role coordinating patient care.”

To clarify, in return for getting paid less doctors that accept ObamaCare-compliant plans are getting more patients and more exposure to medical malpractice lawsuits.

No wonder there’s no directory matching providers to plans. The docs want to hide!

Below is one of the latest cartoons from two-time Pulitzer Prize-winner Michael Ramirez.

View more of Michael Ramirez’s cartoons on CFIF’s website here.

Last June, we highlighted important legislation proposed by Rep. George Holding (R – North Carolina) by asking a straightforward question: “Is it fair that digital radio broadcasters pay royalties for the privilege of playing songs recorded after the arbitrary date of February 15, 1972, but not for pre-1972 recordings?”

This week provided welcome news out of California, as a court correctly answered “no” to that question.

Here is the basic legal issue, as we wrote in June:

Recordings predating 1972 remain protected by a patchwork of state laws, whereas recordings after February 15 of that year going forward are covered under federal law.  That amounts to a historical idiosyncrasy, without any prevailing substantive logic.  But digital radio stations, some of which center entirely upon pre-1972 music, have capitalized on the legal aberration to simply stop paying for performance of the pre-1972 songs still covered by state laws…

Digital radio stations operate under privilege of federal license to broadcast, but take the position that they need not pay for pre-1972 songs that remain protected under state laws.  They profit from playing those songs, but refuse to pay accordingly.  Keep in mind that unlike contemporary performers, many of those older affected artists are no longer capable of touring, and sales of their records have diminished over the years, leaving royalties for performance of their songs as their only remaining means of continuing compensation.”

The proposed federal legislation to rectify that anomaly remains pending, but a court applying one among the patchwork of existing state laws referenced above ruled in accord with the bill’s goal.  In fact, the California court in question granted summary judgment, meaning that it didn’t consider the legal question worthy of going before a jury:

In the battle between today’s digital-music services and yesterday’s oldies artists, score one for the geezers.  The founders of the ’60s rock band the Turtles won a summary judgment on Monday against Sirius XM Radio Inc., in a lawsuit alleging that the satellite-radio company violated California copyright law by playing the band’s songs without permission.  The decision could entitle the band and other oldies acts to royalties from the satellite-radio broadcaster as well as from Internet radio companies like Pandora Media Inc.  Terrestrial radio broadcasters in the U.S. don’t pay royalties to performers of songs but the decision could affect their obligation to do so.”

This is a welcome and correct ruling, but the fact remains that artists shouldn’t have to sue across 50 various states, with inconsistent legal venues, to vindicate their property rights.  Digital radio is a fantastic technological advance, but that doesn’t justify exploitation of legal quirks to dodge compensation to artists who recorded songs prior to the arbitrary date of February 15, 1972.  Hopefully, federal lawmakers follow the court’s wisdom and streamline federal law to resolve this troublesome issue.

In this week’s Freedom Minute, CFIF’s Renee Giachino explains why ObamaCare still matters and why the American people must continue to hold their representatives in Congress accountable on the issue.

Senik:  The Midterms in Prospect: The Senate (Part 3)
Lee:  Inversion: America Has Gone From Attracting Global Business to Penalizing It
Ellis:  Report: Obama Admin Can’t Say How Much It Spends To Promote ObamaCare

Video:  Why ObamaCare Still Matters
Podcast:  Will We Ever Get to the Bottom of the IRS Scandal?
Jester’s Courtroom:  Time Out

Editorial Cartoons:  Latest Cartoons of Michael Ramirez
Quiz:  Question of the Week
Notable Quotes:  Quotes of the Week

If you are not already signed up to receive CFIF’s Liberty Update by e-mail, sign up here.

CFIF’s Timothy Lee, Senior Vice President for Legal and Public Affairs, discusses this week’s United Nation’s summit on climate change, more inconvenient truths about global warming, and Harry Reid’s court packing efforts.

Listen to the interview here.

Eric Holder, the controversial face of the Obama Justice Department, is stepping down as United States Attorney General.

The timing seems odd. If Democrats lose control of the U.S. Senate in this year’s midterm elections – a very likely prospect – it will be impossible for President Barack Obama to win confirmation for a replacement as polarizing as Holder.

That would be a good thing for the Republic.

Among the many blemishes on Holder’s tenure as AG – such as the Fast and Furious scandal, his unprecedented Contempt of Congress citation, his failed attempt to prosecute the 9/11 conspirators in a civil court instead of a military tribunal – it’s the so-called “legacy” actions Holder took that should give observers the most pause.

According to NPR, “Holder most wants to be remembered for his record on civil rights: refusing to defend a law that defined marriage as between one man and one woman; suing North Carolina and Texas over voting restrictions that disproportionately affect minorities and the elderly; launching 20 investigations of abuses by local police departments; and using his bully pulpit to lobby Congress to reduce prison sentences for nonviolent drug crimes. Many of those sentences disproportionately hurt minority communities.”

Notice what’s missing?

Only one achievement on the list actually enforces the law. (And even this area, prosecuting allegedly abusive local police departments, tells us a lot since it’s directed at cops and not, say, verified abuses by the New Black Panthers.)

Everything else – from refusing to defend a traditional marriage statute to playing a prison reform lobbyist – are actions designed to undermine the law as written.

Eric Holder shouldn’t worry. His legacy is clear. His will be remembered as the time when activism replaced lawyering and the rule of law suffered.

Hopefully, it’s not the start of a trend.

If you’ve tried to buy insurance on an ObamaCare exchange, you’re familiar with the four levels of coverage available: Bronze, Silver, Gold and Platinum. Each level covers a set percentage of costs should you incur health-related expenses.

For example, a Bronze plan covers 58-62 percent, a Silver plan 68-72 percent, Gold 78-82 percent and Platinum 88-92 percent.

Notice, however, that there are gaps between the coverage levels.

Recall as well that ObamaCare’s coverage requirements get tweaked from year-to-year, changing the actuarial value – i.e. the percentage of covered benefits the insurance company is expected to pay – each year.

Here’s the problem.

“Suppose you are in a Bronze plan with an actuarial value of 58 percent. Then, a year from now, because of price changes, technology changes, or some other kind of change, your plan suddenly covers 64 percent of expected expenses. That’s good for you, right? Wrong. Because your plan no longer fits into one of the metallic corridors, it’s no longer a valid plan – despite the fact that it has become a better plan,” explains John C. Goodman, a conservative health policy expert.

The same is true at the other end of the coverage spectrum.

“Now let’s suppose you have a really good plan – a plan that pays 98% of expected health care costs,” writes Goodman. “Given the large number of Democrats who believe that health insurance should pay almost every medical bill, you would think that the law passed by a Democratic Congress without a single Republican vote would strongly encourage such a plan. If you’re inclined to think that, you are mistaken, however.

“Any plan that pays more than 92% of expected health care costs for the average enrollee is illegal under Obamacare.”

Get ready to change your health insurance more often than you change your auto insurance.

Doctors who spent heavily trying to comply with ObamaCare’s electronic health records mandate could still be hit with costly penalties.

ObamaCare gives doctors until October 1, 2014, to switch from paper-based to electronic health records. Failure to comply results in losing 1 percent of federal reimbursements for treating Medicare patients.

Here’s the rub.

“[P]hysicians who went electronic for the first time this year are discovering that [the Centers for Medicare and Medicaid Services, or CMS] won’t be ready to officially register the evidence of their work until mid-October. That means they will miss the Oct. 1 deadline, and CMS will withhold 1 percent of their 2015 Medicare payments,” reports Politico.

That means that a doctors’ group like Morganton Eye Physicians in North Carolina spent $1.3 million to buy and implement new software – and added $250,000 to its annual operating budget – only to be threatened with a $65,000 penalty because the federal government can’t meet its own compliance deadline.

One would think CMS has a moral obligation to waive compliance until the agency is able to do its job, but so far it’s requiring doctors to submit to a cumbersome hardship process. How does a business politely explain that the hardship exists completely because of government ineptitude?

Welcome to ObamaCare’s bureaucratic hell. More episodes to follow.

In an interview with CFIF, Marita Noon, Executive Director for Energy Makes America Great and Citizens’ Alliance for Responsible Energy, discusses what President Obama has not done for American energy workers, the lessons he could learn from Texas Governor Rick Perry’s efforts to convince companies to relocate to Texas, and the important role that energy plays in our lives.

Listen to the interview here.

Last week the Obama administration released its first official headcount of ObamaCare enrollments since applauding itself for 8 million initial sign-ups.

The current enrollment is 7.3 million, according to the Centers for Medicare and Medicaid Services (CMS).

But there’s reason to be suspicious.

“Under ObamaCare, after a person has paid their first premium, a health plan can’t cancel anyone until they have gone three months without making a payment,” writes health care policy expert Bob Laszewski.

By saying that the 7.3 million number includes all enrollments that have occurred through mid-August, CMS is “effectively double counting by including the ‘adds’ while also keeping the ‘deletes’.” That means the 7.3 figure “also still includes every person who has failed to make a premium payment in June, July, and August – since the carriers can’t yet knock them off the rolls,” explains Laszewski. “The health plans tell me there is a 2% to 4% monthly attrition rate. That means the 7.3 million could be overstated by 6% to 12% of the total.”

Unfortunately, the most transparent administration in history refuses to release the monthly enrollment numbers since ObamaCare went online. That makes it impossible to verify whether the 7.3 million is accurate.

If the Obama administration is so proud of its new number, why not release the data on which it’s based?

Join CFIF Corporate Counsel and Senior Vice President Renee Giachino today from 4:00 p.m. CDT to 6:00 p.m. CDT (that’s 5:00 p.m. to 7:00 p.m. EDT) on Northwest Florida’s 1330 AM WEBY, as she hosts her radio show, “Your Turn: Meeting Nonsense with Commonsense.”  Today’s guest lineup includes:

4:00 CDT/5:00 pm EDT: Steve Bucci, Douglas and Sarah Allison Center for Foreign and National Security Policy at The Heritage Foundation: Should the U.S. Negotiate with ISIS?; 

4:30 CDT/5:30 pm EDT:  Ilya Shapiro, Senior Fellow in Constitutional Studies, Cato Institute:  Expansion of Executive Powers

5:00 CST/6:00 pm EDT:  Timothy Lee, CFIF’s Senior Vice President for Legal and Public Affairs: The Unimportance of the U.N.’s Climate Summit; and

5:30 CDT/6:30 pm EDT:  Cleta Mitchell, Political Law Attorney and Partner in Washington, D.C. office of Foley & Lardner: The Continuing Saga of the IRS Scandal.

Listen live on the Internet here.   Call in to share your comments or ask questions of today’s guests at (850) 623-1330.

An interesting new bit of original research by The Spectator’s Fraser Nelson entitled “Why Britain Is Poorer Than Any US State, Other Than Mississippi” helps reconfirm the concept of American Exceptionalism even amid the Obama Malaise. First, Mr. Nelson takes a welcome swipe against the all-too-common habit of American self-criticism:

No one beats up America better than Americans.  They openly debate their inequality, conduct rigorous studies about it, argue about economics versus culture as causes.  Their universities study it, with a calibre of analysis not found in Britain.  Americans get so angry about educational inequality that they make films like “Waiting for Superman.”  And the debate is so fierce that the rest of the world looks on, and joins in lamenting America’s problems.  A shame:  we’d do better to get a little angrier at our own.”

Nelson then gets to the heart of the matter:

If Britain were to somehow leave the EU and join the US, we’d be the 2nd-poorest state in the union.  Poorer than Missouri.  Poorer than much-maligned Kansas and Alabama.  Poorer than any state other than Mississippi, and if you take out the south east we’d be poorer than that, too.”

He also addresses the cliche of horrific American inequality along the way:

It’s not surprising that America’s best-paid 10 per cent are wealthier than our top 10 percent.  That fits our general idea of America:  a country where the richest do best while the poorest are left to hang.  The figures just don’t support this.  As the below chart shows, middle-earning Americans are better off than Brits.  Even lower-income Americans, those at the bottom 20 percent, are better-off than their British counterparts.  The only group actually worse-off are the bottom 5 per cent.”

Obama may not believe that American Exceptionalism is of any greater merit than British Exceptionalism, but the facts and some Britons contradict that notion.

Happy “International Talk Like a Pirate Day,” which can make for a bit of harmless office fun on a Friday.

Unfortunately, real piracy of the online variety is no laughing matter.  It costs the American economy billions of dollars and tens of thousands of jobs each year, and even threatens life and health through such things as counterfeit drugs.

This week, a new report was released highlighting the role played by online “cyberlockers” in facilitating worldwide piracy.  Entitled “Behind the Cyberlocker Door:  A Report on How Shadowy Cyberlocker Businesses Use Credit Card Companies to Make Millions,” the report from Digital Citizens Alliance cogently introduces and explains the nature of this problem:

Rogue ‘cyberlocker’ operators peddling stolen content are making nearly $100 million in annual revenues by operating as hubs for the for-profit distribution of infringing digital copyrighted content.  That is the finding of our research looking at the profitability of the leading cyberlockers.  Unlike legitimate cloud storage services whose clients are people and businesses that need to store, access, and share data, the cyberlocker business model is based on attracting customers who desire anonymously to download and/or stream popular, copyright infringing files that others have posted.  The cyberlocker business model is designed around content theft.  In fact, cyberlockers generally pay or provide various incentives to those who distribute popular infringing content and discourage the use of their services for reliable data storage.  As this study shows, the overwhelming bulk of files distributed by cyberlockers infringe copyright.”

For those unfamiliar with the term “cyberlockers,” here is DCA’s definition:

Cyberlockers are online services that are intentionally architected to support the massive distribution of files among strangers on a worldwide and unrestricted scale, while carefully limiting their own knowledge of which files are being distributed.  The link to a user’s file stored on a cyberlocker can be posted to any location for any user to access:  cyberlockers generally place no limits on who can download or stream a file.”

DCA studied 30 sites, and those alone accounted for some $96.2 million in total annual revenue, or $3.2 million per site (one site alone accounting for $17.6 million).  While we must avoid interfering with meritorious technological innovation and the legitimate online marketplace, we must at the same time recognize this emerging problem and advocate corrective social policy to remedy existing piracy threats and deter their spread. Legitimate market participants must therefore determine proper recourse, and elected officials must also begin to consider reasonable avenues to help put a stop to this growing form of theft.