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Anything to see here?

Bruce Krasting's picture




 

 

Two-years have passed since the signing of the Affordable Care Act (ACA, Obamacare). At this point, one thing is clear, there was a significant “drafting” mistake in the original legislation. There has been an on-going fight over this. I think it's coming to a boil. If so, it couldn’t come at worse time for the Administration. Some connecting dots:

 

-A critical component of ACA was the establishment of Health Insurance Exchanges (HIXs). This was supposed to guarantee the availability of "affordable" insurance. Each state will have a HIX.

 

-Under ACA, a state could either, 1) establish its own HIX, 2) Do a partial HIX with federal support, or 3) Let D.C. pick up the whole thing.

 

-ACA provided strong incentives to the states to choose option #1 (90% reimbursement). It was originally assumed that a high percentage of the states would set up their own HIXs.

 

-To make the cost of insurance “affordable” there were tax-credits available for lower income individuals and families. These tax-credits are an essential ingredient to Obamacare.

 

-The following is the key language that is now in question: (Link)

 

Tax credits are available if

 

(A) the monthly premiums for such month for 1 or more qualified health plans offered in the individual market within a State which cover the taxpayer, the taxpayer's spouse, or any dependentof the taxpayer and.....

 

......which were enrolled through an Exchange established by the State

 

 

The tax credits are limited to those states that establish their own HIX. Period. The Letter of the Law reads, (clearly to me) that the ACA tax credits are not available in states that choose to have D.C. manage the required HIX (option #3)

 

-Many states have refused to set up their own HIX. The following shows the tally as of 11/29. Yesterday, NJ’s Chris Christie, surprisingly, said “Nix to HIX”.

 

 

 

 

-If the tax credits for “No HIX” states were to go away, Obamacare goes down for the count.

 

-The Obama Administration “fixed” the problematic “drafting error”. The President called the Treasury Secretary, (Geithner) and told him to fix it. Timmy, in turn, called the boss at the IRS, Doug Schulman, and told him to fix it. Doug issued a ruling that “eliminates” the conflicting language. Poof! The problem goes away. Maybe.

 

-Without the consent of Congress, the IRS changed the letter of the law on the most significant legislation in the past fifty-years. With out the IRS ruling, ACA was D.O.A.

 

The most recent development in this curious story came on Friday. Doug Elmendorf, the head of the Congressional Budget Office (CBO) wrote a letter to Congressman Darrell Issa (R-CA) on this topic. (Link)

 

Elmendorf’s letter was in response to one from Issa. Elmendorf frames Issa’s question:

 

You asked for a description and explanation of CBO’s assumption that premium assistance tax credits established under ACA would be available in every state, including states where the insurance exchange would be established by the federal government.

 

Elmendorf answered with this:

 

To the best of our recollection, the possibility that those subsidies would only be available in states that created their own exchanges did not arise

 

To the best of our recollection?

 

When the CBO originally looked at ACA, it produced reports that assumed that the tax credits would be available to all states, regardless of what choice was made with HIX. This fact is now being used as “evidence” that legislators “intended” to have the credits available without restriction.

 

Issa’s letter was trying to get to the facts. Why didn’t CBO produce numbers that reflected the wording of the law? Elmendorf’s response was a put down (IMHO). He’s saying, “No one brought it up”.

 

I’ll repeat the words that are causing the problem. What’s your interpretation? What was the intent of Congress on the issue of availability of insurance tax credits? Do you think the IRS should have glossed this over? (It was a backdoor “fix”, plain and simple) Do you think Issa is going to rollover on this? (Not a chance) Did the CBO make a mistake by not considering the plain language in ACA back in 2010? (At a minimum, it should have asked for a clarification). And how about the, "We don't recall" answer from CBO?

 

tax credits are available... to those who were enrolled through an Exchange established by the State

 

 

 

Notes:

I'm not sure what to make of this. I think the language was a mistake. ACA was pushed through in 72 hours, no one caught the error.

 

The working assumptions provided by CBO in 2010 were not intended to confuse Congress, but that was the result.

 

The IRS "fix" will be challenged in court.

 

The Congressional Research Service has a good write up on the legal issues involved (Link).

 

The Cato Institute has been pounding away on this topic, Cato believes it has evidence that Sen. Max Baucus (D-MT), Chairman, Committee On Finance, spoke of ACA limiting tax credits to only states with their own HIX. (Link) (Video). If correct, it would be a problem for ACA. I doubt that Baccus is going to speak up on this. After all, he was one of the guys running the show.

 

I don't think this is as cut and dried as Cato makes it out to be. At a minimum, Baccus was confused on the critical question of tax credit availability. That is the point, the big-shots running the show did not really understand what they were doing. Most legislators had no clue what they were signing.

 

There is no easy fix to this. If you asked the House how it would apply the tax credits today, it would limit them, as the original law was written. That vote would be on party lines. There will be no effort to clarify the original language, that would open a huge can of worms. Stay tuned...

 

 

 

 

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Sun, 12/09/2012 - 08:04 | 3046630 nmewn
nmewn's picture

You betcha! ;-)

Sun, 12/09/2012 - 00:05 | 3046432 defender
defender's picture

If you look back over history, doctors not being paid by the poor is the norm.  It isn't until the last 50 years that the hypocratic oath meant "I shall be rich, because you shall pay me much money".  I would rather have the old ways, where poor people went to clinics or doctors that served the poor instead of demanding "free" health care at every emergency room across the US.  It is better that people see the cost of their own actions, than to have it diluted and hidden across the entire tax base.

Sun, 12/09/2012 - 09:19 | 3046667 csmith
csmith's picture

"It is better that people see the cost of their own actions, than to have it diluted and hidden across the entire tax base."

 

Are you kidding? Then there would be no need for politicians! The great obfuscators!

Sun, 12/09/2012 - 01:44 | 3046510 New_Meat
New_Meat's picture

defender, hear ya.  Then the doctors have to be able to accept a chicken for keeping the kid alive.  'course, there was no concept in the days of the GP of an "emergency room".  Then there was no concept of an "emergency room" where there was no emergency.

I'm betting that your wish to return to the old ways is envisioned at the highest levels of the .gov. 

- Ned

Sun, 12/09/2012 - 03:10 | 3046548 TBT or not TBT
TBT or not TBT's picture

Doctors didn't have much to prescribe, a little way of diagnosis, just sixty-seventy years ago.    And there were fewer ambulance chasers around.   And there were a LOT fewer state and federal laws mucking things up between patient and doctor.   Employers weren't involved, largely.   Just a few minor other differences there skippy.

Sun, 12/09/2012 - 21:24 | 3047615 blunderdog
blunderdog's picture

"Modern medicine" even 30 years ago wasn't anything like it is today.

Sat, 12/08/2012 - 21:42 | 3046276 LawsofPhysics
LawsofPhysics's picture

LMFAO! Tell us, what are the WAGES of all those young people. Better bring up that employment chart again. Are these the same ones with all those unpaid student loans? Fucking halarious.

Sun, 12/09/2012 - 00:04 | 3046430 Chuck Walla
Chuck Walla's picture

LMFAO! Tell us, what are the WAGES of all those young people. Better bring up that employment chart again.

This is because the stupid fuckers couldn't figure out who is REALLY going to pay for their beloved Euro-socialism. They keep thinking its someone else when it is their future, their fortune, their crapped out opportunities that pay the price. And whats worse, they will hardly ever figure it out when their retirement age is raised 80.

FORWARD SOVIET!

Sun, 12/09/2012 - 02:23 | 3046532 Harbanger
Harbanger's picture

Stop using italics, people can't vote up or down.

Sat, 12/08/2012 - 20:15 | 3046158 lunaticfringe
lunaticfringe's picture

Bruce, good piece. I don't mean to be the spelling or grammar police...first line should be passed not past, me thinks.

Sat, 12/08/2012 - 20:29 | 3046171 Bruce Krasting
Bruce Krasting's picture

This was a bitch for me to write. Hard to keep it short enough. There were many re-writes. Not typical for me.

Anyway, after a few versions, I don't even see these things.

I "fixed" it.

No more difficult than the IRS fixing the ACA problem. Click, click.

b

Sat, 12/08/2012 - 20:00 | 3046140 Getting Old Sucks
Getting Old Sucks's picture

OT Bruce, but look into the mandate that all cars carry black boxes.  Yes, they have been around for a decade.  However it seems that the owner of the car will not be able to control his/her property if TPTB decide to access it.  Only going by the news report today but know you can find out all the info on how this will violate our civil rights.

Sun, 12/09/2012 - 02:13 | 3046526 Things that go bump
Things that go bump's picture

Will you purchase a vehicle equiped with such a device?  

Sat, 12/08/2012 - 19:46 | 3046118 Lokking4AnEdge
Lokking4AnEdge's picture

Good article Bruce!

Sat, 12/08/2012 - 19:45 | 3046114 Getting Old Sucks
Getting Old Sucks's picture

Drafting mistake?  Has it ever occurred to anyone that perhaps it was not a mistake?  So, you live in a state that refuses to set up exchanges so you get no subsidy.  So the Fed blames the state.  So the peeps not getting the free bucks revolt.  State gives in.  Fed is in charge.  Good bye state rights.

Sat, 12/08/2012 - 21:29 | 3046255 Joe Davola
Joe Davola's picture

You're right on the game plan, Robert's is warming up his word processor's 'equal protection' auto fill command.

Sat, 12/08/2012 - 21:23 | 3046241 The Alarmist
The Alarmist's picture

States Rights were only wounded by the Civil War; they were finished off by Revenue Sharing.

Sat, 12/08/2012 - 20:23 | 3046170 three chord sloth
three chord sloth's picture

Free bucks? I don't think those exist...

Sat, 12/08/2012 - 19:35 | 3046096 Ned Zeppelin
Ned Zeppelin's picture

Who is going to challenge the fix?

It is an obvious error, really surplus language since it was envisioned that an Exchange would, by definition, be set up by a state. It is the practical aspect that is coming home to roost, where it seems quite likley that many exchanges will exist that will not be set up by a State.

Interesting? yes.  Earth shattering, no.  A court would look to the intentions of the drafters to discern how best to interpret this clause.  Unless there is a clear record that it was intentional that non-State exchanges were not to get the advantage of the tax credit, it would be interpreted to allow it.

Not defending the law, but as an attorney, just sayin' how the litigation would play out.

 

 

 

Sat, 12/08/2012 - 22:30 | 3046329 oldschool
oldschool's picture

Actually, courts must first decide if the language clearly expresses an intent.  if it does, the court may not interptet it nor allow an agency to do so.  The language Bruce quoted seems pretty clear, but that doesn't always stop them from interpreting anyway.

Sat, 12/08/2012 - 20:12 | 3046156 Bruce Krasting
Bruce Krasting's picture

Well, as an attorney, what is your take on the IRS ruling that was supposed to have fixed this?

I don't think the IRS should have been the arbiter of this. What IRS did wasn't legal at all, the IRS does not have that authority.

Sun, 12/09/2012 - 02:31 | 3046537 BraveSirRobin
BraveSirRobin's picture

"I don't think the IRS should have been the arbiter of this. What IRS did wasn't legal at all, the IRS does not have that authority."

Are you serious? The government IS the authority, and they will do whatever they please. They determine what is and what is not legal. So who in the Obama administration is going to challenge the IRS? And if congresswere to act, why should they listen to congress? What is congress going to do about it? And the courts? Did you see what Roberts and company did? They simply re-wrote the law and claimed it was a tax law, eventhough it originated in the Senate. And if the courts should rule against the executive, how are the rulings to be enforced? Who executes the law? Why the very same executive who the court has made a judgement against. And what power does the court have to compel the executive? Who has all the guns?

Wake up and smell the coffee. You are at best a serf.

Sun, 12/09/2012 - 20:21 | 3047556 Imminent Crucible
Imminent Crucible's picture

"Who has all the guns?"

Nobody has ALL the guns. They're widely distributed. The Hepburn/Miller report released in 2007 and based on a 2004 survey estimated that 283 MILLION guns are in civilian hands in America. So in strict terms, the civilians outgun the military. That's why they call this America.

Sun, 12/09/2012 - 00:40 | 3046469 Pool Shark
Pool Shark's picture

 

 

I'm not so certain Ned.

Rules of statutory construction would look to legislative intent only if there is an ambiguity in the language itself or a clear mistake. Though I haven't read the actual bill (who has?) the language cited by Bruce looks pretty unambiguous and intentional on its face. Ruling otherwise would render an entire paragraph surplusage.

Of course such "details" usually don't bother Supreme Court justices. (See Roberts' take that the power source for Obamacare's individual mandate comes from Congress' "taxing" authority; even though the bill didn't originate in the House; as mandated for all revenue bills by that pesky little document known as the Constitution...)

In either case; it will be interesting to see if the House Repubs decide to jump on Issa's bandwagon and make this an issue...

 

Sat, 12/08/2012 - 21:22 | 3046239 The Alarmist
The Alarmist's picture

A lot of what the IRS is not compliant with the spirit, much less the letter, of the law, but they collect the juice that keeps the game going, so there is a whole body of "law" written in the courts over the years that makes what the IRS does "legal."

 

Sat, 12/08/2012 - 19:28 | 3046083 Moe Howard
Moe Howard's picture

They don't give a fuck about the Constitution, why would they care if the IRS changes some wording in a unConstitutional monster?

 

More of the same. Latest is Obama will be "sworn in" in private, just like the first time. This time, instead of fucking up the public one, the public one will be fake - a re-enactment.

There is really something spooky about this whole Obamao thing.

Roberts will be the Oath Giver again. Hmmmmmmm.

Sun, 12/09/2012 - 13:59 | 3047041 Winston Churchill
Winston Churchill's picture

Wonder what dirt thay dug up on Roberts.

Something really nasty for sure to abandon his priciples.

He will be allowd to vote with those on minor matters in future

as cover for the major reversals.I thought J. Edgar was dead.

Sun, 12/09/2012 - 10:42 | 3046745 DaveyJones
DaveyJones's picture

it is ironic that our Supremes have ruled that the whole legislation is a tax and they screwed up tax language 

Sat, 12/08/2012 - 22:10 | 3046302 klockwerks
klockwerks's picture

Wonder what he swears on? Alinsky, Koran???

Sun, 12/09/2012 - 10:47 | 3046752 lakecity55
lakecity55's picture

My guess would be a Satanic bible.

You know, one of those old books in the movies made of human skin for the cover, with weird writing in it and pictures of demons ripping off heads and limbs.

Sat, 12/08/2012 - 20:05 | 3046145 Water Is Wet
Water Is Wet's picture

Kinda similar to this article: http://www.telegraph.co.uk/news/worldnews/northamerica/usa/9728794/US-tr...

"President Barack Obama had hoped to prevent yesterday's passage of the new human rights law, in an effort to avoid enraging Moscow. He insisted that he was already empowered to blacklist Russian human rights abusers by executive order."

Sat, 12/08/2012 - 20:08 | 3046154 knukles
knukles's picture

Huh?

Sat, 12/08/2012 - 19:34 | 3046094 knukles
knukles's picture

"There is really something spooky about this whole Obamao thing."

If there were nothing Seriously Fucking Wrong everything would be out in the open, shouted from the roof tops, the truth be made known.

 

But Oh, Fucking No!

"something spooky" is such an Understatement

Sat, 12/08/2012 - 20:20 | 3046165 lunaticfringe
lunaticfringe's picture

Any fucker who has to make a statement that he will be transparent is terminally opaque. Any asshole with 50 books on how to manage a business or people cannot find his ass with two hands in a well lit room.

Sat, 12/08/2012 - 20:18 | 3046164 willwork4food
willwork4food's picture

BOO !!!YA!!!!

Sat, 12/08/2012 - 18:58 | 3046035 ISEEIT
ISEEIT's picture

FORWARD!!!

Never joined a union?

Well, that issue has been 'fixed'.

'FOR' YOU of course....

Snicker...snicker....Snort...Snort.

All part of the 'managed system'..........

Dontcha know??

Sat, 12/08/2012 - 18:51 | 3046026 Seasmoke
Seasmoke's picture

lets ask Nancy Pelosi whats in it

Sat, 12/08/2012 - 18:47 | 3046012 TruthInSunshine
TruthInSunshine's picture

Too much is being made about this.

The legislation was passed by Congress, and the legislative intent will be looked at to glean that the tax credits were meant to be provided to all individuals, regardless of whether their state established an appropriate exchange, assuming that this issue doesn't get resolved by statutory amendment

States will be big winners, along with health care and big pharma, from Obamacare. In fact, it's estimated that states will receive 9 dollars from the federal government for every dollar they spend under Obamacare.

Sun, 12/09/2012 - 13:36 | 3047009 Lednbrass
Lednbrass's picture

Got a link to that estimate which shows its numbers and methodolgy?

Sat, 12/08/2012 - 22:57 | 3046353 Meremortal
Meremortal's picture

"In fact, it's estimated that states will receive 9 dollars from the federal government for every dollar they spend under Obamacare."

 

Free money from the Feds! Why don't they just give us everything so we don't have to work and pay taxes anymore?

Sat, 12/08/2012 - 20:15 | 3046159 nmewn
nmewn's picture

"In fact, it's estimated that states will receive 9 dollars from the federal government for every dollar they spend under Obamacare."

As the trees groan and the green ink turns to red.

Sun, 12/09/2012 - 11:58 | 3046838 TruthHunter
TruthHunter's picture

"states will receive 9 dollars from the federal government for every dollar they spend"

Then why did so many states opt out?  My guess this is propaganda. If this was really

that good of a deal for the states, why would a guy like Rick Scott opt out for Florida?

If its ideological, Scott's a bigger jerk than I thought.

 

 

Sun, 12/09/2012 - 15:50 | 3047213 A Nanny Moose
A Nanny Moose's picture

Is he a jerk IF he understands that the Feds have less than NO money, and doesn't want to steal from other states, and future generations? Is he a jerk IF he understands that this is the path to even more coercive, nationalized health care, and IF he seeks to reduce the coercion? Is he a jerk IF he understands that the current health care mess is the result of government intervention, and wants to stop doing the same thing over and over, while expecting different results? Is he a jerk IF he understands that nothing comes from Uncle Sugah, without strings attached. Is he a jerk IF his reasons are 10th Amendment related?

I am not saying he is right, or fighting the good fight. Just trying to put the continued rubbing of the government genie's lamp, into perspective. Use your wishes wisely.

Sat, 12/08/2012 - 23:53 | 3046421 Chuck Walla
Chuck Walla's picture

"In fact, it's estimated that states will receive 9 dollars from the federal government for every dollar they spend under Obamacare."

I swear, the world has gone "full retard". $9 for every $1 spent? And where does this manna come from?  Magic?  Along with all the other unicorns?

FORWARD SOVIET!

Sat, 12/08/2012 - 21:59 | 3046289 FMR Bankster
FMR Bankster's picture

You gotta love this whole thing don't ya. They pass this piece of sh*t but know the costs are going to explode so they try and suck in the states to push off responsibility. "You just put up one little dollar and we'll put up nine." "Cus we're your friends, honest."

Sat, 12/08/2012 - 22:41 | 3046304 TruthInSunshine
TruthInSunshine's picture

Apparently, ZH is being infiltrated by imbecilic government employees and Democrats (and estabishment Republicans), as they hate when facts are communicated, especially because they are not capable of being able to mount an intelligent defense of what is abhorrent legislation such as Zerocare.

I wouldn't be surprised if Krasting himself is fan of massive government, especially since he's requested an immediate eleventy zillion taxpayer dollars for New York & New Jersey in the wake of Superstorm Sandy (the storm that was 10,000x more powerful than Katrina).

Sun, 12/09/2012 - 12:17 | 3046871 11b40
11b40's picture

Oops!  I didn't realize this was a Tea Party web site.  Sorry for my intrusion.

Sun, 12/09/2012 - 07:46 | 3046624 Bruce Krasting
Bruce Krasting's picture

I've requested zillions for NY??

When did I do that??

Sat, 12/08/2012 - 23:47 | 3046414 nmewn
nmewn's picture

I'm still trying to figure out why you got junked up top, so it must be imbeciles.

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