Last Wednesday, the Senate voted 47-51 against the “Repealing the Job-Killing Health Care Law Act.” 50 Democrats and one Independent voted against the Act while all 47 Republicans voted in favor of it (click here to view results). No surprises there… but where do we go from here?
The Washington Post and the New York Times report that pro-repeal Senators and activists remain energetic and optimistic. Senator John Cornyn (R-Texas) observes “[t]hese are the first steps in a long road that will culminate in 2012.” Marilyn Shachter, a tea party activist, predicts a repeal “definitely will happen. It may take until 2012, or after 2012, when we get rid of Mr. Obama and a lot of these borderline senators that are up for reelection are replaced.” Keith Hennessey, former Assistant to the President for Economic Policy and Director of the National Economic Council, outlines a two-year “path to repeal” the Patient Protection and Affordable Care Act (PPACA):
- Keep up the pressure in 2011 and 2012:
- maintain and strengthen Republican unity toward full repeal;
- repeatedly attack the bill legislatively on all fronts, knowing that most votes will pass the House and fail in the Senate;
- continue legal pressure through the courts; and
- tee up repeal as a key partisan difference in the 2012 Presidential and Congressional elections;
- In 2012 win the White House, hold the House majority, and pick up a net 3 Republican Senate seats to retake the majority there; and
- In 2013, use reconciliation to repeal ObamaCare, requiring only a simple majority in the Senate.
ABC News notes that the latest repeal attempt “was just one of three ways the Republicans are trying to kill the health care law.” The second way involves the constitutional challenges filed in the courts. The third way involves Senator Lindsey Graham (R-SC) and Senator John Barrasso’s (R-WY) proposed legislation allowing states to opt out of certain PPACA provisions, such as the individual mandate.
I would add a fourth way: good ol’ public relations (see my previous post on renaming/rebranding PPACA). For instance, last Thursday Alaska Governor Sean Parnell announced that he had asked the state attorney general whether implementing and enforcing PPACA would violate his oath of office. The Governor described himself as being “caught between a federal government that says, ‘You must pursue this, you must pursue this,’ and I have the duty to uphold the rule of law.” There’s some solid, dramatic PR right there.
Be that as it may, the Senate has spoken. The lower courts have spoken. Senators Graham and Barrasso have spoken. Governor Parnell has spoken. Members of this blog have spoken. Must we wait until Mr. Hennessey’s two year “path to repeal” has been successfully implemented or foiled before the Supreme Court chimes in?
Last year I wrote about why the misconceptions about my generation, dubbed “young invincibles” by many, have perpetuated a belief that young people do not care about health insurance. Thankfully, the health care reform legislators realized that we too, with our superpowers and all, prefer to be healthy and insured.
The most immediate benefit that dependent young people will see under the Patient Protection and Affordable Care Act is the ability to stay on their parents’ insurance until the age of 26; this will take effect in six months. For recent college graduates, and many who have chosen not to pursue a college education, this brings a sigh of relief. The bill also loosens the requirements for who qualifies as a dependent. Even for those who will be approaching 26 soon after the bill passes, the new age limit will afford some time to get coverage through a job with benefits. Marriage status may not necessarily restrict whether or not a child can stay on their parents insurance, as noted by young uninsured expert Sara Collins. Employed children may also qualify for the dependency status as long as they do not have the option of health insurance through their employer. The new bill also applies to all health plans, whether fully insured or self-funded, which was not the case under most state health care extensions to young people.
For those young people that will be 26 before this September, there are other options. The organization that helped esure representation of young people throughout the health care debate, aptly named Young Invincibles, provides a timeline of the other health reform bill measures that will offer help to the young uninsured. It also shows when these provisions will take effect.
One of the main benefits to consider is that by 2014, more young people will qualify for Medicaid. This will help insure about 9 million young people. Young Invincibles co-founder Ari Matusiak finds that young people will be some of the greatest beneficiaries of the health care reform bill because the young population is currently the poorest of the age demographic groups and because the bill aims to make health care more affordable for those least able to afford it.
One of the other benefits young people will be afforded comes in the form of tax credits to purchase insurance from the individual market. These are available to those individuals who earn less than $43,320. While the individual market is not the friendliest place to be, new reform measures will ensure that health care prices will not be based on pre-existing conditions and limits the ratio of premiums based upon age (down to 3:1). The pre-existing condition restriction certainly helps those young people who have chronic conditions (about 15% of us.) Though the age rating restriction benefits older people more than young people, Ari Matusiak rightfully points out that young people are not going to be young forever and can appreciate the idea that we will have security of being able to get insurance without being discriminated against in the future.
Scare tactics are rearing their ugly head again, as many say that the new benefits offered to young people are just increased burdens. Yes, young people will be required to purchase insurance under the new reform bill or they will be subject to a penalty. The fine will be $95 in 2014 and will gradually increase each year (until 2016, when it tops out at $695 or 2.5% of an individual’s annual income). Given this minimal penalty at the outset, many assume that young people will opt out of purchasing insurance and just pay the fine instead. These are the same people that think young people don’t care about feeling secure with health insurance. Well, to put this succinctly, we do care. Some may, out of economic desperation, eschew coverage, but so many of us have relatives and friends who have had catastrophic health issues that have left them in debt (or further in debt), that the choice is not likely to be made lightly. We have had our own health issues. We need prescription medicines and regular checkups. We are not invincible– and we know it.
A majority of us are supportive of the health reform bill. As young people, we must educate ourselves about the health reform bill so that we know where we stand. We are an integral piece of the reform legislation working as planned. And while we won’t be duped to do something that harms us more than helps us, we also won’t be beguiled into believing that the new health care legislation is not for us — it is for us– and we should reap its benefits as part of our political patrimony, knowing that in doing so we also help to provide for our posterity.
Consumer Watchdog has authored an important letter to HHS Secretary Kathleen Sebelius on loopoholes in PPACA. The letter highlights the importance of rapid and forceful rulemaking at HHS to ensure that the framework set up by legislation actually promotes affordable access to care. Here are some highlights.
1) Vague “review” of insurance rate increases: The statute provides grants to assure that states “review” insurer rate increases, but does not provide adequate guidance on acceptable performance here. Without something like “all-payer rate setting” operating as background cost-control, the legislation’s prescribed “medical loss ratios” could even encourage insurers to increase rates:
the federal law’s requirement that insurers spend 80% or 85% of the premiums they collect on health care services will—absent strict rate regulation—perversely encourage insurers to raise their premium rates. In the same way that a Hollywood agent who gets a 20% cut of an actor’s salary has an incentive to seek the highest salary, insurers will have incentive to increase health care costs and raise premiums so that their 20% cut is a larger dollar amount.
2) Lack of real rescission reform: One of reform’s key selling points is preventing rescissions–an insurance company’s cancellations of policies for members just at the point they need them most. Consumer Watchdog worries the protections will turn out to be illusory:
A key rallying cry for federal reform was the insurer practice known as rescission—retroactive cancellation of coverage after a patient makes a claim for health care services. Insurers often argue that a rescission is warranted because the patient intentionally failed to report minor health problems when applying for coverage. Such rescissions are carried out unilaterally by the insurer and regardless of whether the patient even knew about, or understood the significance of, the health problem the insurer claims was intentionally omitted from the application. Since an applicant’s health condition is no longer relevant to determining insurability, coverage rescissions should be barred outright.
However, section 2712 of the Senate legislation allows for rescission of health policies on
the basis of fraud or the “intentional misrepresentation of material fact as prohibited by
the terms of the plan or coverage.” The insurers are left to define the terms of future coverage rescissions in the fine print of their policies. No new regulatory oversight of rescission is provided to ensure that omissions or errors are indeed fraudulent or intentional, rather than innocent mistakes.
3) Manipulating the Medical Loss Ratio: Here CW calls out Wellpoint, whose CEO enjoyed a massive pay increase last year while socking it to California insureds.
The new federal health reform law requires that insurers spend at least 80% of customers’ premiums on medical care in the individual insurance market, and 85% in the employer/group market. HHS must narrowly define what constitutes medical care to block gaming of the new medical loss ratio requirement by health insurers. [because insurers like Wellpoint have said they would] simply re-label administrative costs as “medical care” in response to the new health reform law.
4) Weak federal fallback. This is one of the most disturbing aspects of the Consumer Watchdog letter, and definitely bears watching as state governments hostile to reform begin implementing it:
The threat of strong federal fallback is the kind of carrot and stick approach that would encourage state regulators to act where they otherwise may not. However, federal enforcement fallback provisions are virtually absent from the bill. For example, under section1321(c) federal regulators shall step in to operate a state Exchange if (and only if) a state fails to implement one at all. . . . Medicaid, HIPPA, COBRA, and the CHIP program for children’s health insurance all provide minimum
federal standards and funding levels but allow states to fit the federal program to local needs,
provide enforcement, and adopt more robust regulations not envisioned by federal law.
Since the courts have not been very supportive of judicial interventions to enforce Medicaid beneficiaries’ legal rights (given Gonzaga v. Doe), it’s essential for the feds to develop a record of enforcement when wayward states fail to protect their citizens.
Image Credit: Linda Hirschman.
Interesting article by Timothy Noah over at Slate on the enforceability (read, “collection”) of taxes assessed for failure to procure insurance under the individual mandate contained within the new Health Reform law.
Noah, working with some posts from Prof. Timothy Jost and some recent comments from the IRS Commissioner, Douglas Shulman, notes provisions within the bill that will make enforcement difficult. They are worth noting.
As the failure to procure assessment is a tax, the IRS is charged with its collection. Verification will be done through a form similar to the 1099 for bank interest, but this form will be received from one’s insurance company. You will then attach that form to your tax return. And if you don’t and do not pay the either $695 or 2.5% of your income–whichever is higher? The Health Reform law imposes fairly stringent restrictions upon the form that collection efforts may take. From Noah:
What if your failure to obtain health insurance means you owe the penalty but you nonetheless refuse to pay it? That’s where things get tricky. The IRS can’t throw you in jail, because the health reform law explicitly states (on Page 336): “In the case of any failure by a taxpayer to timely pay any penalty imposed by this section, such taxpayer shall not be subject to any criminal prosecution or penalty with respect to such failure.”
Nor can the IRS seize your property, because the law states (also on Page 336) that the health and human services secretary may not “file notice of lien with respect to any property of a taxpayer by reason of any failure to pay the penalty … or levy on any such property with respect to such failure.”
So without the ability to prosecute, penalize, or file a notice of lien–what’s left? As Noah notes, Tim Jost points out that most people, desirous of obeying the law generally, will do so in this matter particularly. And many who do not have health insurance–often the self-employed or independent contractors of some sort or another with long complex and deduction riddled tax returns–will be prudently averse to raising the red flag of civil disobedience.
According to Commissioner Shulman (again via Noah who took the time to transcribe Shulman’s press conference in its pertinent parts),
“People will get letters from us. We can actually do collection if need be. People can get offsets of their tax returns in future years, so there’s a variety of ways for us to focus on things like fraud, things like abuse, and we’re gonna run a balanced program.”
Noah then asks a rather interesting series of questions:
But if the IRS owes you a refund, isn’t that refund in effect your property? And if the IRS decides to withhold part or all of that refund because you didn’t pay your tax penalty for not obtaining health insurance, doesn’t that amount to seizure of your property? Or was Shulman just talking about people who might claim they paid the penalty but really didn’t, or who might claim that one of the law’s exemptions applied to them when it really didn’t, or who might engage in some other form of conscious duplicity that violated some other statute? (Is that what Shulman meant by “things like fraud, things like abuse”?) I’m not certain Shulman’s reply addressed the scenario Jost envisioned, wherein a civilly disobedient citizen would forthrightly tell the IRS: Yes, under this law I owe you $695, but I refuse to pay it. What are you gonna do about it?
First things first, I would argue that fraud and duplicity are separate from merely not paying or refusing to pay. Congress enjoined the prosecution or the levy of liens for a failure to pay–that does not include, in my estimation, a similar proscription against prosecuting tax fraud– which is what such “conscious duplicity” would entail. Separate matter, separate punishment– which I think the Commissioner alludes to in the above quote.
As for the withholding of a refund? It is, I believe, a valid exercise of the office. It may, however, for analysis, be easier to think of the practice as “an offset,” not a withholding of refund. It’s an important distinction under these circumstances and the Commissioner spoke in terms of “offset.” The IRS will not so much be keeping your refund from you, as they will be merely utilizing the money withheld for its explicitly intended purpose: to pay a valid tax. In the scheme of things it would not be proper to say that the IRS owed you a $1000 refund, but then deducted $695 tax from your refund for your failure to have health insurance, and thereby left you with a refund of only $305.
They never owed you $1000 to begin with. Because you didn’t have health insurance, you owed an additional $695 in tax. You never had $1000 coming from the IRS. They only ever owed you $305; the “refund” being that which remains after all your tax has been paid. The other $695, by law, was always theirs and they have merely used the money set aside (for most people, incrementally through each paycheck) in the manner for which it was intended: to pay a valid tax. It is not “seizure,” merely appropriate allocation.
Mintz Levin: “Health Care Reform Advisory: Assessing the Impact of Federal Health Care Reform on Employers and Employer-Sponsored Group Health Plans”
I’ve written before on this blog about the value of Mintz Levin’s reports, and am about to do so again (you can find their work, as a permanent link, under “Resources” on this blog). There is, linked below, a very nicely done recap of the health reform law– which gets quickly to the point regarding the implications of a number of provisions within the law for employers and employer-sponsored group health plans. For those of you unfamiliar, Mintz Levin is a law firm with its primary office in D.C., and a health sciences group with a well deserved reputation for excellence. If you are an employer, or even an employee that has some appropriate notion of “trickle-down,” I highly recommend you take a look.