D.C. Council’s Motto: “Obamacare for Thee — But Not for Me!”

On the first of the month, D.C. Mayor Muriel Bowser held an event at Freedom Plaza to celebrate the start of Obamacare’s annual open enrollment period. She appeared with Mila Kofman, head of the District’s health insurance exchange, D.C. Health Link. In conjunction with the event, the mayor issued a proclamation declaring the open enrollment period “Get Covered, Stay Covered” months, and noting that “residents should visit [D.C. Health Link’s website] to shop for and compare health insurance.”

But in encouraging others to “get covered,” and promoting the D.C. Health Link site, Bowser omitted one key detail: She does not buy the policies that D.C. Health Link sells. My recent Freedom of Information Act request confirmed that Bowser, like most of her D.C. Council colleagues, received taxpayer-funded insurance subsidies to purchase their coverage through the District government, rather than through D.C. Health Link. Thus, DC spent nearly half a million in taxpayer funds because the mayor and council won’t be bothered to enroll in Obamacare.

Forfeiting generous employer subsidies might seem like an unreasonable request to make of the mayor and council. But earlier this year, the council passed, and Bowser signed, legislation requiring all District residents to buy health coverage or pay a tax — including tens of thousands of residents who do not qualify for subsidies.

According to public records, Bowser receives an annual salary of $200,000; council members receive $140,600 annually. This year, I will receive less income than any of them, and as a small business owner my income is far from guaranteed, unlike public officials’ salaries. Yet the mayor and council have required me to buy health coverage without a subsidy, even as they refuse to do so themselves.

I asked Bowser about this obvious inequity. Under Obamacare, an individual with income of $50,000 — one-quarter of Bowser’s salary — does not qualify for an income-based subsidy. Bowser required this individual to buy coverage without assistance, while earning much more in salary and retaining her employer subsidy. Did she see a double standard in her conduct?

When it came to the issue of equity and fairness, she didn’t have a substantive answer, nor did her council colleagues. I asked staff for each council member about their health insurance coverage, and any subsidies received. Most staff never responded to my outreach. Staff for Councilman Robert White said they would ask him about his coverage, but never sent a reply. Staff for two councilmembers, Phil Mendelson and Brandon Todd, replied with explanations about the subsidies being provided as an employer benefit.

But neither Bowser nor the council members could justify requiring other District residents, including many with lower incomes than they, from buying coverage without a subsidy even as they will not do so themselves. And how could they? Quite often, it seems liberals who preach frequently about “fairness” regarding others’ actions fall eerily silent when doing so would cost them personally. “Obamacare for thee — but not for me” doesn’t provide a particularly compelling slogan, but the mayor and council have sent that very message by their actions.

Official Washington contains numerous examples of hypocrisy and double standards, but that doesn’t make either a “D.C. value.” If Bowser wishes to abide by the D.C. values she campaigned on, she and the council members should give up their subsidies and buy health insurance just like ordinary residents do. If they find that task too difficult or costly, then perhaps they should repeal the exact same requirement they put on everyone else.

This post was originally published at The Federalist.

Let the Individual Mandate Die

In May New Jersey imposed a health-insurance mandate requiring all residents to buy insurance or pay a penalty. More states will feel pressure to follow suit in the coming year as the federal mandate’s penalty disappears Jan. 1 and state legislatures reconvene, some with new Democratic majorities intent on “protecting” Obamacare. But conflicts with federal law will make state-level health-insurance mandates ineffective or unduly onerous, and governors and legislatures would do well to steer clear.

While states can require citizens to purchase health coverage, they will have trouble ensuring compliance. Federal law prohibits the Internal Revenue Service from disclosing tax-return data, except under limited circumstances. And there is no clear precedent allowing the IRS to disclose coverage data to verify compliance with state insurance requirements.

Accordingly, mandates enacted in New Jersey and the District of Columbia earlier this year created their own coverage-reporting regimes. But those likely conflict with the Employee Retirement Income Security Act, or ERISA, which explicitly pre-empts “any and all state laws insofar as they may now or hereafter relate to any employee benefit plan.” The point is to protect large employers who self-insure workers from 50 sets of conflicting state laws.

No employer has used ERISA to challenge Massachusetts’ 2006 individual mandate, which includes reporting requirements, but that doesn’t mean it’s legal. Last month a Brookings Institution paper conceded that “state requirements related to employer benefits like health coverage may be subject to legal challenge based on ERISA preemption.”

A 2016 Supreme Court ruling would bolster such a challenge. In Gobeille v. Liberty Mutual, the court struck down a Vermont law that required employers to submit health-care payment claims to a state database. The court said the law was pre-empted by ERISA.

Writing for a six-justice majority, Justice Anthony Kennedy noted the myriad reporting requirements under federal law. Vermont’s law required additional record-keeping. Justice Kennedy concluded that “differing, or even parallel, regulations from multiple jurisdictions could create wasteful administrative costs and threaten to subject plans to wide-ranging liability.”

Justice Kennedy’s opinion provides a how-to manual for employers to challenge state-level insurance mandates. A morass of state-imposed insurance mandates and reporting requirements would unnecessarily burden employers with costs and complexity. It cries out for pre-emptive relief.

Unfortunately, policy makers have ignored these concerns. Notes from the working group that recommended the District of Columbia’s individual mandate never mention the reporting burden or ERISA pre-emption. And in August the federal Centers for Medicare and Medicaid Services approved New Jersey’s waiver application that relied in part upon funding from that state’s new individual mandate, even though money from the difficult-to-enforce requirement may never materialize.

States already cannot require federal agencies to report coverage. This means their mandates won’t track the 2.3 million covered by the Indian Health Service, 9.3 million receiving health care from the Veterans Administration, 8.8 million disabled under age 65 who are enrolled in Medicare, 9.4 million military Tricare enrollees and 8.2 million federal employees and retirees.

If a successful ERISA challenge also exempts some of the 181 million with employer-based insurance from coverage-reporting requirements, state insurance mandates become farcical. States would have to choose between mandates that run on the “honor system”—thus likely rife with cheating—or taking so much time and energy to verify coverage that administration becomes prohibitively expensive.

States should take the hint and refrain from even considering their own coverage mandates. But if they don’t, smart employers should challenge the mandate’s reporting requirements. They’d likely win.

This post was originally published at The Wall Street Journal.

About That “Junk” Insurance

On Wednesday, the Trump administration released its final rule regarding short-term, limited-duration insurance coverage. For all critics’ carping about how short-term coverage epitomizes “junk insurance,” these plans will provide another option for individuals who find Obamacare-compliant policies unattractive and unaffordable.

Pros and Cons of the Rule

The Cato Institute’s Michael Cannon lists a good summary of the rule’s benefits. At a time when the market for unsubsidized coverage away from the exchanges has dropped by nearly 40 percent, short-term plans will allow individuals who find Obamacare-compliant coverage unaffordable to purchase coverage.

Whereas the Obama administration defined “consumer protections” as “protecting people from being a consumer” of anything other than exchange plans, the Trump administration’s rule allows consumers to buy coverage that actually protects them from future harmful health events.

That said, the rule brings with it two notable drawbacks. First, the administration believes it could raise federal spending by $28.2 billion over a decade. The estimate comes because some healthy people likely will leave the exchanges to buy more affordable short-term coverage, raising premiums—and thus premium subsidies—for those who remain in Obamacare-compliant plans. While the Congressional Budget Office estimated a much smaller (and slightly positive) fiscal impact, the rule could end up increasing spending at a time when the federal government has racked up $21 trillion in debt (and counting).

Second, the rule doesn’t repeal Obamacare—an obvious statement, but one with important implications. Another president can easily revoke the Trump administration’s actions, and the next Democrat will almost certainly do just that. While helpful, the rule itself should not serve as an excuse for Congress not to take action to repeal Obamacare’s harmful regulations—because if you like your short-term plan, and Congress does nothing, you probably won’t be able to keep it.

What’s the Real ‘Junk Insurance’?

But as I wrote last week, Kofman has refused to buy an Obamacare plan, because she claims she requires an employer subsidy—this despite making more than $217,000 per year. Given her sizable income, Kofman must not think exchange policies unaffordable, even without an employer subsidy.

After all, the Exchange Authority recently endorsed, and the District enacted, a mandate requiring people with far less income than her—that is, people like me—to buy unsubsidized coverage or pay a tax. Why does she not buy the insurance policies she sells—because she considers them “junk insurance?”

She’s not alone. At a briefing last month, Sara Collins, a vice president at the Commonwealth Fund, asked whether short-term plans and other non-Obamacare policies would have “warning labels on them.” Collins neglected to provide a warning of her own: She has not purchased an exchange plan. Lest one think she cannot afford to do so, Commonwealth’s tax filings reveal that for the 12 months ending in June 2017, Collins received $334,353 in total compensation (including benefits).

I consider the very definition of “junk insurance” a policy that one encourages others to buy but refuses to purchase. On that, Corlette has a sterling track record. At a 2016 briefing, her presentation included a bullet point about the need to increase exchange sign-ups. She went further in her oral remarks: “I think it’s critical to do everything we can do boost enrollment.”

But when I asked Corlette at that same 2016 briefing if she had taken her own advice and bought an exchange plan, I received a song-and-dance about her life as a “spoiled academic.” Lest anyone think her unfeeling, however, she allowed that “I do try to think about” individuals without employer-sponsored coverage when designing insurance coverage standards.

Principles Versus Power

That’s the point. If Obamacare advocates thought achieving the law’s goals was so critical, they would have put their money where their mouths are and enrolled in exchange plans long ago. For all liberals’ talk of solidarity and “We’re all in this together,” the unwillingness for individuals making hundreds of thousands per year to enroll in exchange coverage, even though they could easily afford to do so, astounds. Given their own failures to enroll, who are they to criticize President Trump for “sabotaging” the law?

In their quiet moments, people like Kofman, Collins, and Corlette may wonder what strange confluence of events led the American people to elect Donald Trump, and empower him with the authority to dismantle their liberal paradise. But their failure to practice what they preach yields a ready answer: They need only look in the mirror.

This post was originally published at The Federalist.

How D.C. Leaders Ignore Their Own Constituents on Health Care

The July 24 editorial “ ‘Here we go again’ ” misapportioned blame. Instead of attacking the House, the editorial should have examined the disregard the D.C. government has shown residents by passing a controversial requirement to purchase health coverage.

The D.C. Council opaquely enacted a major policy change, burying the provision in a 300-page bill featuring clerical amendments to things such as the Eastern Market Enterprise Fund. The council’s press release said not a word about the mandate’s enactment.

Second, the head of the D.C. Health Benefit Exchange Authority, which requested the mandate, refuses to buy the plans she sells. When I asked her about this in 2016, Mila Kofman claimed that buying an exchange plan would cause her to forfeit her employer subsidy. I find it absurd that an individual making more than $217,000 per year requires insurance subsidies yet wants to tax people such as me — who make far less yet receive no subsidies — who do not purchase a “government-approved” plan.

D.C. officials who complain about disregard from Congress should not deprecate or disregard their own residents. Unfortunately, passing laws surreptitiously, imposing requirements on others while not following them oneself, and ignoring constituent complaints all qualify.

This post was originally published at The Washington Post.

Will the Senate Make Exchange Heads Purchase Exchange Coverage?

This week, the Senate will likely consider a package of several appropriations measures. The legislation provides an opportunity for senators to offer, and possibly vote on, an amendment defunding the District of Columbia’s new health insurance mandate.

Because such an amendment, proposed by Rep. Gary Palmer (R-AL), passed in the House last week, if a similar amendment passes the Senate, it would almost certainly remain in the final version enacted into law. As a result, residents of the nation’s capital would not face the threat of having their property seized if they cannot afford to purchase “government-approved” health insurance.

A Firsthand Display of Hypocrisy

I have seen up close how the heads of exchanges do not purchase exchange coverage. In the fall of 2016, CareFirst Blue Cross cancelled my exchange insurance policy, in part due to regulations promulgated by the District’s exchange authority.

To find out the reasons for the cancellation, I attended a meeting of the authority board. When I asked whether employees of the exchange purchase exchange coverage themselves, Mila Kofman, the exchange’s director, responded that doing so would cause employees to forfeit their employer insurance subsidy, making coverage unaffordable.

That explanation makes sense for junior employees making $40,000, $60,000, or even $80,000 annually. But it seems much less justifiable for Kofman. Kofman did not disclose it at the meeting I attended, but I later learned through DC public records that in 2016, she received a salary of more than $217,000—more than Mayor Muriel Bowser herself.

If Kofman cannot, or will not, purchase the exchange plans she sells without a subsidy, why would she, and the exchange board, support requiring residents making a fraction of her income to do so, and punishing them with taxes—and the threat of property seizure—if they do not?

‘1 Percenters’ Won’t Buy Exchange Coverage

Nor do the double-standards remain confined to the District of Columbia. The head of California’s exchange receives a salary putting him in “the 1 percent,” yet refuses to purchase the plans he sells.

I had previously recounted how Peter Lee, Covered California’s executive director, admitted to me at a briefing that his health insurance coverage comes through California’s state employee plan—at taxpayer expense, of course. Yet Covered California’s website lists his current monthly salary at a rate of $36,400, or a whopping $436,800 per year.

With all that money, does Lee really need to have taxpayers fund his health benefits as well? Does he think the policies Covered California sells so unaffordable, or so poor in quality, that he refuses to buy them? Or does he just feel entitled to have taxpayers fund his benefits on top of his fat paycheck because he thinks he’s better than we are?

The Amendment Concept

In theory, the Trump administration could have solved this problem months ago, by issuing regulations requiring all CEOs of state-run exchanges—and, for that matter, their board members too—to purchase plans from the exchanges. If those individuals consider exchange plans so inferior or unaffordable that they will not purchase them for themselves, then they have no business selling them in the first place.

(In case you were wondering, yes, I do believe that at the federal level, the U.S. secretary of Health and Human Services and Centers for Medicare and Medicaid Services administrator should buy exchange plans. I previously criticized former CMS Acting Administrator Andy Slavitt for failing publicly to disclose that he held exchange coverage during a Democratic administration, and I would be remiss not to point that out under a Republican one.)

At that point, people like Mila Kofman and Peter Lee will have a choice to make. They can determine whether they care more about keeping their taxpayer-funded health insurance benefits, or ensuring their constituents continue to have access to insurance subsidies. In short, they can choose whether they will finally put their principles ahead of their own pocketbooks—which they should have been doing all along.

This post was originally published at The Federalist.

Preserving Health Care Freedom in the Nation’s Capital

Two weeks ago, I described how provisions in a budget bill that the District of Columbia Council quietly passed would extend the reach of government-controlled health care in the nation’s capital. The provisions buried in that budget bill would not only reimpose the health insurance mandate penalty within the District of Columbia that Congress set to zero beginning in January, but would go further, by allowing DC authorities to place liens on, seize, and sell the property of individuals who cannot afford to pay the mandate tax.

Thankfully, my post had its intended effect in raising awareness of the issue among federal policy-makers. The office of Rep. Gary Palmer (R-AL) responded, introducing an amendment to appropriations legislation that the House of Representatives will consider this week.

Prevents Affordable Options from Qualifying 

The Palmer amendment would also allow individuals to purchase the type of health coverage they desire without getting hit with a “stealth” tax bill after-the-fact. If the District’s law goes into effect in January, individuals buying the new, more affordable coverage options proposed by the Trump administration could face exactly that.

The mandate the DC Council approved (see pages 168-82 here) effectively re-imposes on the District Obamacare’s individual mandate as it existed last December 15—the date the congressional conferees on the tax bill filed their conference report (i.e., before legislation setting the federal mandate penalty to zero was signed into law). By linking the District’s mandate to the policies and regulations in place as of last December 15, the DC mandate also prevents the new options the Trump administration is introducing from qualifying as “minimum essential coverage” for purposes of complying with the mandate.

For instance, the DC law defines “minimum essential coverage” as “minimum essential coverage as defined by section 5000A of the [federal] Internal Revenue Code of 1986 and its implementing regulations, as that section and its implementing regulations were in effect on December 15, 2017.” It further specifies that “minimum essential coverage” shall include:

Health coverage provided under a multiple employer welfare arrangement; provided that the multiple employer welfare arrangement provided coverage in the District on December 15, 2017, or complies with federal law and regulations applicable to multiple employer welfare arrangements that were in place as of December 15, 2017.

Locks Out Short-Term Coverage, Too

The District’s statute also would exclude short-term health plans from qualifying as “minimum essential coverage” for purposes of its health insurance mandate. Obamacare itself defined “minimum essential coverage” to include “coverage under a health plan offered in the individual market within a state.” But because another portion of federal law says “‘individual health insurance coverage’ means health insurance coverage offered to individuals in the individual market, but does not include short-term limited duration insurance,” short-term plans would not qualify.

Obamacare did give the secretary of Health and Human Services, along with the secretary of the Treasury, discretion in determining other forms of “minimum essential coverage” for purposes of the federal mandate. However, because the District linked its mandate to those federal definitions in effect as of December 15, 2017—well before the Trump administration first proposed its changes to the regulation of short-term plans on February 20, 2018—short-term plans would not qualify as acceptable coverage under the District’s mandate.

District residents who purchase short-term plans, like those who access the expanded association health plans, would not comply with the new coverage requirements. Particularly given the very quiet way the DC Council enacted the legislation, many individuals may not know that the District re-imposed a health insurance mandate or that certain types of coverage do not comply with it, and face an unpleasant tax “surprise” in the spring of 2020 (as they file their DC tax returns for 2019). Unless, of course, Congress enacts the Palmer amendment into law.

Congress’s Constitutional Duty

Moreover, it also belies the fact that DC officials made little attempt—one could argue purposefully made little attempt—to publicize the council’s deliberations over this change. I e-mailed three people in Mayor Muriel Bowser’s press office about the council’s actions two weeks ago, and still have yet to receive so much as an acknowledgement.

Bowser can argue all she wants about “Taxation without Representation,” but given that her office made zero attempt to represent me, she has little right to complain. The House should pass the Palmer amendment this week, and prevent the strong-arm tactics associated with government-controlled health care from taking root in the nation’s capital.

This post was originally published at The Federalist.

D.C.’s Latest Health “Reform:” Seizing People’s Property

Just when you think the move for government control of health care couldn’t get any worse, somehow it manages to. Last Wednesday, the District of Columbia City Council approved a requirement for all DC residents to purchase health insurance. The mandate would take effect in January, right when the federal mandate penalty drops to $0, as per last year’s tax law.

The D.C. mandate contains three elements that make it just as bad as, if not worse than, the federal mandate it is intended to replace.

A (Deliberately?) Opaque Process

A cynic might believe that the D.C. Council acted in such a low-key manner by design. The council did not approve the mandate as a stand-alone bill, but wrapped it into a 297-page Budget Support Act. That bill contains such unrelated provisions as an amendment regarding the Fort Dupont Ice Arena, technical corrections to a supermarket tax incentive program, and amendments regarding civic associations using public schools.

Likewise, a press release by the D.C. Council summarizing Wednesday’s meeting contained not a word about imposing the individual mandate, nor did the council website show any stand-alone votes on the mandate itself. This lack of disclosure pushed me to contact my council member, Charles Allen, to find out what had happened at the council meeting Wednesday.

Upon hearing that the mandate as passed of a much larger package, I asked one of Allen’s staffers whether this provision had been “snuck in at the last minute.” The staffer said DC Mayor Muriel Bowser had proposed the mandate as part of her budget submission to the council back in March. He then rather sheepishly added that, while people had testified on behalf of other portions of the Budget Support Act, no one had spoken about the mandate specifically.

For a district that decries “Taxation Without Representation,” this Nancy Pelosi-esque behavior—where we literally had to pass the bill to find out what was in it—seems to embody the very congressional tactics that DC leaders love to hate.

Harsher Penalties for Violators

During the 2009-10 debate on Obamacare, the threat of penalties for violating the individual mandate became a source of intense controversy. During the Senate Finance Committee’s markup, Sen. John Ensign (R-NV) received a handwritten note from Thomas Barthold, head of the Joint Committee on Taxation, stating that, under federal law, non-payment of the mandate tax could result in imprisonment. Democrats buckled under this political pressure, removing from the Internal Revenue Service the power to imprison violators, or impose liens on personal property, for non-payment of the mandate tax.

By contrast, the district’s mandate—which comprises pages 168-182 of the Budget Support Act—includes this language at the bottom of page 180: “A taxpayer who fails to pay the District of Columbia shared responsibility payment imposed…shall be subject to all collection, enforcement, and administrative provisions applicable to unpaid taxes or fees, as provided in Chapter 18, Chapter 41, Chapter 42, Chapter 43, and Chapter 44 of this title [emphasis mine].”

Unlike the federal Internal Revenue Code, it does not appear at first glance that the district’s tax law allows for imprisoning individuals for non-payment of taxes (as opposed to deliberate tax evasion or fraud). However, Chapter 44 includes the following language:

If a person determined to be liable to the District of Columbia for a tax neglects or refuses to pay the tax within 10 days after notice and demand, the Mayor may collect the tax, with interest and penalties thereon (and an amount sufficient to cover the expenses of the levy), by levy upon all property (including rights to property) of the person or on which there is a lien provided in this chapter for the payment of the tax.

No wonder the D.C. Council didn’t want to hold an up-or-down vote on just this provision.

Hypocrisy Much?

Another relevant fact to the district’s mandate: The head of the District’s health insurance exchange—which recommended creating a DC mandate following the removal of the federal tax penalty—doesn’t buy exchange coverage herself. As I previously noted, many exchange heads (and Obamacare supporters) refuse to buy the coverage they promote, including the head of the district’s exchange, Mila Kofman.

When I discovered in late 2016 that I could not retain that plan in 2017, due in part to regulations imposed by the district’s exchange, I attended a meeting of the exchange authority. I asked Kofman whether she, and other exchange employees, purchased exchange coverage. She claimed that she and her colleagues could not purchase exchange policies, because they would lose their employer subsidy in the process.

I don’t know whether Bowser and the DC Council behave similarly to Kofman, but I can guess. On Thursday afternoon, I e-mailed Bowser’s office asking about the DC insurance mandate, and whether Bowser received a taxpayer subsidy for her insurance coverage. (The district’s mayor receives a salary of $200,000 annually.) I also asked what Bowser would “say to District residents like me—who make far less in salary than she does, yet do not receive [taxpayer-]subsidized benefits—being forced to buy coverage under penalty not just of taxation, but of property seizures through DC’s tax enforcement mechanisms?”

Wouldn’t you know it: I have yet to receive a response.

Here Are Some Policy Solutions

Thankfully, several of the policy and process problems outlined above contain within them readily achievable solutions:

  • The D.C. Council should pass legislation requiring the mayor, council, exchange CEO, and exchange board members to buy coverage through the exchange—without using separate taxpayer-funded benefits available to other district employees.
  • If the council will not act, the Trump administration could promulgate regulations requiring the CEOs and board members of all state-run exchanges (including the district’s) to buy the coverage they promote and oversee.
  • Congress could also exercise its constitutional prerogatives and strike down the district’s individual mandate, ensuring that no individuals will have their property seized by an overzealous government if they cannot afford to buy “bureaucrat-approved” health insurance.

Better yet: The District of Columbia Council could decide to stop micromanaging its residents’ health care by surreptitiously passing onerous mandates in legislation that few district residents know about.

This post was originally published at The Federalist.