New Precedent Allows Congress to Dismantle (Some of) Obamacare

What does a ruling about automobile financing have to do with Obamacare? As it turns out, plenty.

This week the Senate acted to repeal a piece of regulatory guidance the Consumer Financial Protection Bureau (CFPB) issued back in March 2013. As a Politico report Wednesday noted, that precedent allows Congress to nullify other regulatory actions the federal government took years ago—including those on Obamacare.

1996 Law Allows for Expedited Process

Until this week, Congress has generally enacted CRA resolutions of disapproval following a change in administration, when one party controlled both houses of Congress and the presidency. In 2001, Republicans passed, and President George W. Bush signed, a resolution of disapproval negating an ergonomics rule promulgated in the waning days of the Clinton administration. Last year, the Republican Congress passed and President Trump signed 14 resolutions of disapproval undoing Obama administration actions.

Action on CRA resolutions of disapproval undoing Obama administration actions had largely ended last year. The CRA provides that Congress can consider resolutions of disapproval under expedited procedures only within 60 legislative days of the rule’s “submission or publication date.” Because the Obama administration’s final regulatory actions occurred early in 2017, the 60 legislative-day clock ran out last year—or so it appeared.

However, as the Heritage Foundation’s Paul Larkin has argued for many years, the CRA contains a big catch. According to the law, the expedited procedures apply for the 60 legislative days following “the later of the date on which” Congress receives a required report on the regulatory action, or the action is published in the Federal Register. If an administration never officially submitted a report to Congress, the 60 legislative-day clock never began, and the current Congress can still pass a resolution of disapproval under the CRA-expedited procedures.

Because the Obama administration did not consider the CFPB document a “rule,” it never submitted it to Congress, as required by the CRA. The 60 legislative-day clock never expired, because the Obama administration never started it by submitting the document to Congress. That meant the Senate could, and did, pass a resolution of disapproval negating the CFPB guidance this week, more than five years after CFPB first issued it.

Now Congress can do the same thing regarding Obamacare.

This Opens Lots of Doors for Obamacare Regs

To be sure, Congress cannot pass resolutions of disapproval regarding Obamacare rules that the Obama administration officially submitted years ago, which is most of them. But in some cases, the last administration may not have formally submitted sub-regulatory guidance, giving Congress an opening to repeal at least part of Obamacare’s regulatory structure.

I wrote early last year that the Trump administration should unilaterally revoke that guidance, but unfortunately, it has not done so yet. However, if the Obama administration never submitted that guidance to Congress, then Congress—using the precedent set this week—can pass a resolution of disapproval negating it. Alternatively, Congress can consider starting action on a resolution of disapproval, to get the Trump administration off the proverbial dime in revoking the guidance themselves.

The CRA precedent set this week also serves as a cautionary tale for the Trump administration, a warning to act thoroughly with its own regulatory actions. For instance, the guidance to state Medicaid programs issued earlier this year regarding work requirements likely meets the definition of a “rule” for CRA purposes. If the Trump administration never submits that action to Congress, a future Democratic administration and Democratic Congress could—and if given the chance, certainly would—act to undo the guidance, and thus the Medicaid work requirements.

But even as the Trump administration should act to cement its own regulatory legacy, Congress can act to negate portions of Obamacare through resolutions of disapproval. I know from experience that staff in Congress, and during the transition, compiled lists of rules that they can use CRA to target. During my time on Capitol Hill following Obamacare’s passage, staff kept a spreadsheet containing all the rules and notices the law generated—the source of the “Red Tape Tower” that used to appear around the Capitol.

This post was originally published at The Federalist.

Health Insurance Bailout Is Subprime Redux

Stop me if you’ve heard this story before: Financial institutions, enabled and empowered by lax regulators, make unwise multi-billion-dollar bets that threaten the well-being of millions of Americans—not to mention federal taxpayers. The subprime mortgage crisis that led to the financial meltdown of 2007-08? Sure. But it also describes insurers’ risky bets on Obamacare in 2017-18.

At issue in the latter: Federal cost-sharing reduction payments, designed to reimburse insurers for providing discounted co-payments, deductibles, and the like for certain low-income households. While the text of Obamacare includes no explicit appropriation for the payments, the Obama administration decided to start providing the payments to insurers anyway when the law’s insurance exchanges opened in 2014.

By summer 2016, anyone could have seen problems on the horizon for insurers: Collyer had declared the cost-sharing payments unconstitutional; a new president would take office in January 2017, and could easily terminate the payments unilaterally, just as Obama started them unilaterally; and neither Hillary Clinton nor Donald Trump made any clear public statements confirming the payments would continue.

Worried about their potential exposure, insurers tried to fix their dilemma, but didn’t. Insurers insisted upon language in their contracts with healthcare.gov, the federally run insurance exchange, stipulating that cost-sharing reductions “will always be available to qualifying enrollees,” and allowing them to drop out of the exchange if those reductions disappeared.

But the legal and constitutional dispute does not apply to payments to enrollees. Insurers are legally bound to provide those reductions regardless. The contract provides no help to insurers on the fundamental question: Whether the federal government will reimburse them for providing individuals the reduced cost-sharing.

Likewise, despite having multiple reasons to do so, state regulators did not appear to question the uncertain status of the cost-sharing payments when approving insurers’ 2017 rates in the fall of 2016. I asked all 50 state insurance commissioners for internal documents analyzing the impact of the May 2016 court ruling declaring the payments unconstitutional on the 2017 plan year. In response, I have yet to receive a single document to indicate that regulators demonstrated concern about the incoming administration cutting off billions of dollars in federal subsidies to insurers.

Having under-reacted surrounding the cost-sharing reductions for much of 2016, insurers and insurance commissioners have spent the past several months over-reacting. Industry lobbyists have swarmed Capitol Hill demanding Congress pass an explicit appropriation for the payments—and more bailout payments besides.

But the hyperventilation regarding the cost-sharing payments sends the wrong message to financial markets: They can ignore significant risks, so long as their competitors do so as well. The “uncertainty” surrounding the payments was knowable, and known, both to insurers who tried to change their contracts with the federal exchange, and to analysts like this one. Yet insurers did not change their behavior to reflect those risks, nor did regulators require them to do so.

This post was originally published at The Federalist.

Obamacare and “The Bright Light of Day”

In a post on the White House blog yesterday, OMB Director Lew chided Congress in general, and Republicans in particular, for daring to attach policy riders to appropriations measures currently working their way through Congress.  Of particular note was the sentence in which Lew stated that “ending health care and Wall Street reform are major policy choices that should be made in the bright light of day, and not attached to appropriations bills needed to keep the government operating.”

Seeing as how Director Lew suggested that Republicans are afraid of considering an Obamacare repeal “in the bright light of day,” it’s worth remembering the absurd lengths this Administration and Democrats in Congress went to in order to enact Obamacare in the first place:

  • Candidate Obama repeatedly promised to televise health care negotiations on C-SPAN, “so that people can see who is making arguments on behalf of their constituents, and who are making arguments on behalf of the drug companies or the insurance companies.”  Instead President Obama and Democrats went and drafted their massive 2,700 page law behind closed doors.  Speaker Pelosi took the frequent President’s campaign pledges for transparency so nonchalantly she laughed it off as a joke.
  • The head of the pharmaceutical industry bragged how Administration officials enticed him, and other industry groups, to cut secret agreements to support Obamacare: “We were assured: ‘We need somebody to come in first.  If you come in first, you will have a rock-solid deal.’”  The details of that “rock-solid deal” between the Administration and Big Pharma have STILL not been released publicly.
  • President Obama himself admitted in a January 2010 interview with Diane Sawyer that “amongst supporters…we just don’t know what’s going on” behind closed doors.  He and Democrats promptly re-grouped, drafting new language to pass the bill – behind closed doors.
  • Democrat Members of Congress said they couldn’t be bothered to read the bill – because it was a waste of time, they needed lawyers to read the bill for them, and because “we have to make judgments very fast.”  Democrat leaders admitted that “If every Member pledged to not vote for it if they hadn’t read it in its entirety, I think we would have very few votes.”
  • Speaker Pelosi famously said we had to pass the bill to find out what’s in it – because she apparently believed the American people couldn’t be told its contents in advance.
  • Even as Administration officials were publicly claiming they were “entirely persuaded” that controversial portions of Obamacare were fiscally sustainable, career officials were calling the same program “a recipe for disaster” – evidence that the Administration concealed their knowledge that the law will ultimately be a budget-buster.
  • Following Ted Kennedy’s death, the White House enlisted Democrat allies in the Massachusetts legislature to pass a partisan bill gaming the Commonwealth’s laws and inserting an appointed Senator who would vote to pass Obamacare – the second time in five years Democrats in the Massachusetts legislature changed the laws for partisan gain, because they apparently viewed a United States Senate seat as their party’s personal property.
  • After the voters in Massachusetts told Democrats they had different ideas and elected a Republican to the Senate, Democrats used an arcane procedure to ram through the 2,700 page bill – a procedure even Speaker Pelosi’s staff called a “trick,” and which one expert said utilized parliamentary tactics to overturn the outcome of an election.

Given this dubious history, Republicans will take no lectures on passing measures “in the bright light of day” from this Administration or Democrats in Congress, who passed an unpopular – and constitutionally questionable – law the American people never wanted.

Washington’s New Regulatory Behemoth

The New York Times has an excellent story this morning on the “scramble” by myriad Washington bureaucrats to write regulations regarding the health care and financial overhauls.  Among the issues raised in the piece:

Broad Discretion to Unelected Officials:  “The laws were so broad and complex that executive-branch regulators have wide leeway in determining what the rules should say and how they should be carried out.”

Wasteful Spending:  “In Bethesda, [Maryland,] health care officials are leasing more than 70,000 square feet of space on three floors of an office building for about 230 employees to work on rule-making and other duties.  The government agreed to pay $51.41 per usable square foot of space, compared with an average of $27 in Bethesda, because it wanted to get the operation running in July, officials said.”

Lack of Transparency:  “With the rules spread across agencies, no one is certain how many employees are working on them, but the number is certainly in the hundreds or higher.”

In the period from March to September, bureaucrats released 4,103 pages of regulations implementing the health care law – and many of these were done without any opportunity for public comment.  While candidate Obama repeatedly promised to televise the health care negotiations on C-SPAN, President Obama’s Administration has created a new unaccountable bureaucracy where the American people can’t even find out how many people are working to create these massive new regulations. (Has anyone seen a list of key staff running the Office of Consumer Insurance Information and Oversight, the new bureaucracy occupying three sprawling floors of an office building in Bethesda?  It’s certainly not for Republicans’ lack of asking…)

Overall, the regulatory leviathan being established by this Administration – rules released without public comment, a massive new bureaucracy up oversight, the new federal head of health insurance regulation not subject to Senate confirmation – does not meet the White House’s promise for “an unmatched level of transparency, participation, and accountability across the entire Administration.”  It also illustrates the significant structural flaws inherent in Democrats’ government takeover of health care.

Democrats FINALLY Discover AARP Has a Conflict of Interest

In case you missed it, Sen. Harkin was just on the floor criticizing AARP for opposing his annuities amendment.  He accused the organization of having a conflict of interest because they offer AARP-branded annuities in a marketing arrangement with New York Life, and their annuities would be disadvantaged by his amendment.  It’s curious that Sen. Harkin now thinks that AARP has a conflict of interest, because just a couple of weeks ago the Wall Street Journal reported on a Democrat presentation that showed AARP as a “third-party validator” of the majority’s claims.  How can you be an independent third-party validator of Democrat policies when even Democrats admit you have conflicts of interest?

Of course, when it comes to health care, it should be no surprise that Democrats finally discovered that AARP has conflicts of interest, because AARP’s own former executives have been saying that for years: “There’s an inherent conflict of interest…They’re ending up becoming very dependent on sources of income.”  But it’s worth noting how many backroom deals and exemptions AARP received from Sen. Harkin and his Democrat colleagues when it came to their most lucrative product – Medigap supplemental insurance:

  • EXEMPT from the prohibition on pre-existing condition exclusions, such that AARP can continue to impose waiting periods on vulnerable seniors with pre-existing conditions – as it does currently (Section 1201(2)(A), Page 81 of H.R. 3590);
  • EXEMPT from a $500,000 cap on executive compensation for insurance industry executives, so that AARP can continue to give its CEO more than $1 million in annual compensation – over 78 times the average annual Social Security benefit of $12,738 (Section 9014, Page 1995 of H.R. 3590);
  • EXEMPT from the tax on insurance companies that will total more than $14 billion per year – even though according to its own financial statements AARP generated more money from insurance industry “royalty fees” than it received from membership dues, grant revenues, and private contributions combined (Section 10905(d), Page 2395 of H.R. 3590); and

  • EXEMPT from a requirement imposed on Medicare Advantage plans to spend at least 85 percent of their premium dollars on medical claims – AARP Medigap policies are currently held to a far less restrictive 65 percent standard, and the difference can be used to fund “kickbacks” to AARP paid out of the pockets of its senior citizen members (Section 1103, Page 49 of H.R. 4872).

So if Sen. Harkin now wants to criticize AARP for having a conflict of interest, perhaps he should start by explaining exactly why he supported legislation that will enable AARP to rake in hundreds of millions of dollars in additional “kickbacks” – all the while denying care to vulnerable seniors with pre-existing conditions.

AARP’s Health Care Bailouts

You may have heard about a new advertising campaign initiated by AARP in support of the Wall Street bailout bill up for possible floor consideration this week.  Even as AARP claims to support new financial regulations “to stop the fat cats from putting your money at risk,” it’s worth highlighting the special bailouts AARP’s lucrative Medigap business – a market where AARP holds the largest share of policies – received in the health care legislation it supported:

  • EXEMPT from the prohibition on pre-existing condition exclusions, such that AARP can continue to impose waiting periods on vulnerable seniors with pre-existing conditions – as it does currently (Section 1201(2)(A), Page 81 of H.R. 3590);
  • EXEMPT from a $500,000 cap on executive compensation for insurance industry executives, so that AARP can continue to give its CEO more than $1 million in annual compensation – over 78 times the average annual Social Security benefit of $12,738 (Section 9014, Page 1995 of H.R. 3590);
  • EXEMPT from the tax on insurance companies that will total more than $14 billion per year – even though according to its own financial statements AARP generated more money from insurance industry “royalty fees” than it received from membership dues, grant revenues, and private contributions combined (Section 10905(d), Page 2395 of H.R. 3590); and

  • EXEMPT from a requirement imposed on Medicare Advantage plans to spend at least 85 percent of their premium dollars on medical claims – AARP Medigap policies are currently held to a far less restrictive 65 percent standard, and the difference can be used to fund “kickbacks” to AARP paid out of the pockets of its senior citizen members (Section 1103, Page 49 of H.R. 4872).

It’s also worth highlighting the fact that AARP continues to stonewall multiple Congressional attempts to obtain specific data about its Medigap royalties – likely because it does not want the public to know how much money the various bailouts described above will allow AARP to obtain by over-charging seniors for supplemental insurance.  As a result, Republicans on the Ways and Means Committee today issued a letter to United Health Group requesting information about the Medigap plans it sells under the AARP brand name – because AARP refuses to provide the data itself.

So if AARP really wants financial “reform,” perhaps it should start by:

  • Complying with Congressional requests – rather than stonewalling out of sheer embarrassment that the level of financial benefit to AARP from the Democrat health care law should become public;
  • Renouncing all the bailouts it received in the health care law by complying with the pre-existing condition and other restrictions facing other insurance companies – rather than denying vulnerable seniors with pre-existing conditions by imposing waiting periods on coverage; and
  • Abiding by the same salary restrictions imposed on other health insurance companies in the health care law – rather than decrying “fat cats” while granting its CEO a million-dollar compensation package funded by over-charging seniors for insurance.

UPDATE: To follow up on this point, the Wall Street Journal reports about a Democrat political memo leaked last week regarding the Wall Street bailout bill.  The memo includes AARP on a list of “third party validators” that they will use to message against Republicans regarding the financial bailout bill.  So to summarize: Democrats will just happen to rely on AARP’s “validation” as a way to launch political attacks on Republicans – mere weeks after Democrats passed a health care takeover bill that just happened to grant AARP a series of special bailouts for its lucrative Medigap policies…