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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 - 00:36 | 3046464 TruthInSunshine
TruthInSunshine's picture

One of them is Bruce. He's still annoyed at talk of limousine liberals getting phat cash from Obamney, even as Obamney submitted the request for 60.4 billion federal reserve notes to CONgress in order to repair damage from the "biggest storm to ever hit any part of the world times infinity."

Sun, 12/09/2012 - 13:25 | 3046997 Freddie
Freddie's picture

"Hurricane" Sandy was mostly a joke.  The storm surge in areas was bad but the construction of some of the "houses" in the NE must be junk.  Where did sall those fires come from?  Homes in Florida and the SE never catch on fire in hurricanes.  Were they electrical fires because Con Ed failed to cut the power and the flooding caused electrical fires?    Now everything is about looting the Treasury and endless bailouts.

The joke newsmedia goes along with all of it.

Sun, 12/09/2012 - 16:20 | 3047255 Louie the Dog
Louie the Dog's picture

I wonder how many of these homes would be rebuilt if they had to build using the Miami-Dade building code.  

Sat, 12/08/2012 - 18:39 | 3046008 becky quick and...
becky quick and her beautiful mouth's picture

they'll just ignore it, like everything else.

Sun, 12/09/2012 - 12:12 | 3046854 Rainman
Rainman's picture

yup....never let any potential constitutional violation go to waste.

Sat, 12/08/2012 - 18:36 | 3046006 dogfish
dogfish's picture

Just sign on and a contribution appears in thier war chest. Its simple,no need to read.

Sat, 12/08/2012 - 18:35 | 3046002 Seer
Seer's picture

It's all moot, no one can afford "health care" anyway!

All a distraction from the reality that the REAL problems are being covered over, that this is all a cover to hide/protect the Corporate food industry.

The hamster wheel continues to spin...

Sat, 12/08/2012 - 20:33 | 3046183 cornedmutton
cornedmutton's picture

Ah, yes.  But the whole argument rests on the assumption that there's still some sembelance of the rule of law, which there isn't, as we all know by now.

Sun, 12/09/2012 - 11:02 | 3046776 El Oregonian
El Oregonian's picture

Rule of law??? Brush up on the "Act of 1871" to find out what happened to our country. Read it and weep...

Sat, 12/08/2012 - 19:42 | 3046107 john39
john39's picture

not mention big pharma and big insurance. obama care is a fasccist orgy of corporate green and destruction of individual liberty.

Sun, 12/09/2012 - 10:56 | 3046769 Oldwood
Oldwood's picture

This is the plan. "Gift" the perpetrators to accelerate their demise while effectively demonizing them. Insurance companies, banks and big business. All headed in the same direction, nationalization. They just don't think it is far enough along in "Crisis" for the public to justify their actions. There is only one reason they did not pass single payer, total government controlled healthcare and that is because they couldn't get enough leftists to support it publicly with a vote. The current plan will  lead to financial collapse of the insurance system with rapidly escalating costs. The insurance and drug compaies will be the villain and Obama will have no choice but to step in and save us...again. The villains will be doing exactly what the law subscribes yet they will be held responsible, therefor evil.

Sun, 12/09/2012 - 07:10 | 3046611 bank guy in Brussels
bank guy in Brussels's picture

It seems ObamaCare is the absolute worst health care system in the entire developed world

One of the world's most corrupt governments running everything

Hundreds of billions of profits for big politically-connected companies who are raping common people

More money spent than any other country on health care

Yet tens of millions of people still will have no health insurance after ObamaCare is in place

It seems in US health care you have the worst of all aspects in the developed world - the worst of corporate greed and the worst of government control and the worst of tens of millions of people having no health care

 

Sun, 12/09/2012 - 19:26 | 3047471 Dr. Sandi
Dr. Sandi's picture

The U.S. has had the developed world's worst health care system for quite some time now. Obama Kare is just another innovation to make sure we protect that position for a few more years.

Sun, 12/09/2012 - 10:38 | 3046738 DaveyJones
DaveyJones's picture

it is funny, it is the worst. you get neither "benefit"of a single payer system or the private system. as a sole proprietor, my premiums have only gone up. and I 've noticed that the only folks not taking a hit are insurance and drug. What a coincidence, that's who had 19 secret white house meetings before the bill. contents the white house blocked from open government. i've had hilarious debates with folks who when confronted admit to the problems then say well we needed to start somewhere. guess they don't think you can actually make something worse

Sat, 12/08/2012 - 18:20 | 3045982 Dr. Sandi
Dr. Sandi's picture

These lobbyist written laws are far too cumbersome for anybody in government to read before enacting.

Sat, 12/08/2012 - 21:37 | 3046267 holdbuysell
Sun, 12/09/2012 - 01:06 | 3046493 Freddie
Freddie's picture

I hope Pelosi's wine vineyards in Nor Cal get a daily dusting of Iodine 131.

http://www.scpr.org/news/2012/04/08/31939/iodine-131-found-california-kelp-fallout-fukushima/

Sun, 12/09/2012 - 19:23 | 3047465 Dr. Sandi
Dr. Sandi's picture

Unfortunately, Pelosi's not the one drinking the swill her peons produce.

Sat, 12/08/2012 - 21:01 | 3046214 negative rates
negative rates's picture

Well that's why we had to pass it now so you could find out what's in it later, clause attached, compliments of Nancy!

Mon, 12/10/2012 - 17:49 | 3049876 Ned Zeppelin
Ned Zeppelin's picture

Bruce - looks like you are on to something. There is serious question as to whether this was a mistake.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2106789

 

good job

Sun, 12/09/2012 - 13:59 | 3047036 Midas
Midas's picture

+1

Thanks for the info Bruce.  One question, I live on the west coast and I don't remember being asked if my state should run a statewide HIX.  I know it's quaint to think I should have a say in the matter, but are they going to get around to asking me soon?

Mon, 12/10/2012 - 06:20 | 3048139 DonutBoy
DonutBoy's picture

Don't be a troglodyte.  The annointed have got your back dude!  Stay chill.  It'll be run just as well as everything else going through Sacramento.

Sat, 12/08/2012 - 18:30 | 3045997 Seer
Seer's picture

Just like the USA (UN)PATRIOT ACT, in which only ONE US Senator refused to endorse because no one bothered to read it.  Of course, all the fascists set about to successfully rid the Senate of this one Senator...

Sat, 12/08/2012 - 21:55 | 3046286 flacon
flacon's picture

Chuck Schumer?

Sun, 12/09/2012 - 01:45 | 3046512 Tinky
Tinky's picture

Are you effing kidding? That Wall Street owned, reflexive Israel supporter? He voted FOR the Patriot Act.

It was one of the last truly reasonable, independent politicians we have seen in the U.S., Russ Feingold, who was the sole dissenter.

Sun, 12/09/2012 - 07:11 | 3046610 bank guy in Brussels
bank guy in Brussels's picture

Lucky he didn't end up suddenly killed like US Senator Paul Wellstone in 2002, after opposing the US Iraq War ...

Dead in an accident which many say was a murder, like that of US Congressman Sonny Bono in 1998 ...

Or US Congressman Wayne Owens in Israel in 2002, found dead while investigating some Israeli corruption ...

Or US Federal Judge John Roll shot dead in Arizona in 2011 shortly after ruling against Obama and the US gov't ...

US Senators and Congress people and federal Judges ending up suspiciously dead and their deaths all nicely buried by the media

The ones remaining alive definitely get the message though

Sun, 12/09/2012 - 11:22 | 3046799 TruthHunter
TruthHunter's picture

"Lucky he didn't end up suddenly killed like US Senator Paul Wellstone in 2002"

 

He hasn't died of old age yet has he?

Sun, 12/09/2012 - 10:29 | 3046731 DaveyJones
DaveyJones's picture

I immediately thought of him too

Sun, 12/09/2012 - 13:08 | 3046941 Muppet Pimp
Muppet Pimp's picture

The biggest flaw in this plan is that it provides 'healthcare' to the parasites, and many of them are drug addicts.  And with (edit) some doctors prescribing dope like they do, these people can now get unlimited access to getting high on the backs of the productive.  A travesty this is, but alas, it will not stand.  Mark my words.

Bruce: Sorry I did not address your question directly but in my mind it is water under the bridge 'how' I am more concerned with 'what' which has been made available to me like a buffet.

Sun, 12/09/2012 - 14:27 | 3047080 Manthong
Manthong's picture

I'm just going to have a medium rare steakburger and a big gulp to celebrate national health care.

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