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.

Burr Amendment (#3652) on VA/Tricare and Individual Mandate

Below please find a summary from my colleague Mike Stransky regarding Sen. Burr’s amendment (#3652) making VA and Tricare coverage compliant with Obamacare’s individual mandate…
Considerations
• The amendment clarifies that beneficiaries of Tricare or Veterans health care programs meet the individual mandate requirement of the health care Act with that coverage.
• The amendment also provides that all VA and DOD health care programs are to remain intact with their benefits unaffected by the health care Act.

Background
• Section 1501 of the health care bill provides the individual mandate, requiring that all lawful residents purchase qualified insurance coverage or pay a penalty.
• To be sure, the bill provides that certain government sponsored programs meet the requirement to maintain “minimum essential coverage,” namely Medicare, Medicaid, SCHIP, Tricare for Life, and “the Veteran’s health care program” under Title 38 Chapter 17.
• It is of some question, however, whether all those who receive health care as a military or veteran benefit would meet this requirement.
o For example, Representative Ike Skelton, the Chairman of the House Armed Services Committee, said during the House’s consideration of the Senate health care bill, “Although the health care legislation passed by the House explicitly exempted TRICARE from being affected, the Senate bill did not.”
• The entire House apparently had this fear for all military families, veterans, and their dependents, because it rushed through on Saturday by a unanimous vote the Tricare Affirmation Act, HR 4887, which amended the health care bill it was about to pass on Sunday to clarify that health care coverage provided by the Tricare program shall constitute minimal essential health care coverage required by the health care Act.
• In explaining his amendment, Senator Burr asserted that this quick fix may not make clear that all Tricare and Veterans health programs satisfy the individual mandate.  For example, he mentioned a Veterans Spina Bifida program under Title 38 Chapter 11, which would not be captured by the terms of the health care Act that is now law.
o In interpreting legislation, courts oftentimes rely upon a canon of construction that expressio unius est exclusion alterius, where the expression of a list of items of an associated group or series is meant to exclude other items left unmentioned.
o As noted in the second bullet above, the health care Act provides a list of government programs providing that if someone has health coverage under one of those programs that person meets the “minimum essential coverage” requirement.
o The Veterans Spina Bifida program would not be on that list.
o It is also unclear, for example, if the fix-it language of the Tricare Affirmation Act covers CHAMPVA (Civilian Health and Medical Program), a program providing benefits to the surviving spouse or child of a veteran who died from a service-connected disability, as well as to spouses and children of veterans rated permanently and totally disabled from a service-connected disability.
• There is little guidance on when a legislative list is meant to be exhaustive as opposed to illustrative.  United States v. Vonn, 535 U.S. 55, 65 (2002).  This amendment removes that guesswork, making it plain and unambiguous that Tricare and all VA health care programs satisfy the individual mandate. 
• Democrats assert this reconciliation bill is the opportunity to correct unacceptable elements of the Senate health care bill.  It should certainly be unacceptable that the Senate bill does not make clear that Tricare and VA health care coverage satisfies the individual mandate.
• If this amendment is not adopted, it would not be clear that Tricare or VA health program beneficiaries comply with the individual mandate of the health care Act.  If they do not, and those beneficiaries do not bring themselves into compliance with this demand by 2014, they would face a penalty.  If any of that penalty falls on a service member or Veteran not making at least $250,000 per year, this would violate the pledge of candidate Obama that his tax plans “will not raise any tax rate on families making less than $250,000 per year, period!”
• Voting against this amendment could potentially subject active duty service members and veterans health care beneficiaries to penalties for failure to comply with the individual mandate.

Collins Amendment (#3638) to Waive Employer Mandate

Below please find my colleague Jon Lieber’s analysis of the Collins amendment (#3638) to waive the employer mandate tax for the hiring of previously unemployed individuals…

 

Summary

The health care bill requires that all employers with at least 50 full-time employees offer their employees the “opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan.”

Minimum essential coverage generally means coverage that covers at least 60 percent of the actuarial value of a full-coverage plan.

If an employer fails to offer such coverage, and at least one full-time employee receives a premium tax credit through the exchanges created by the bill, a tax is levied on the employer equal to $2,000 multiplied by the total number of employees employed by the employer (the first 30 employees are exempt from that count).

This is known as a “free rider” penalty, since it is designed to punish employers who do not offer government-approved coverage, if their employees receive a tax credit in the exchange.

This tax raises $52 billion over the next ten years.

The Collins amendment waives the employer mandate tax for any new employee hired who was previously unemployed, by not including these employees in the count of “full time employees” for purposes of calculating employer mandate compliance.

The definition of a qualifying employee for purposes of this amendment is the same as that used in the Hatch/Schumer payroll tax credit previously considered by the Senate and included in the HIRE Act – it is an employee who signs an affidavit that he or she has not been employed for more than 40 hours during the 60-day period prior to the date of new employment.

Considerations

The unemployment rate is 9.7 percent and 15 million Americans are out of work; 1 in 4 of these out-of-work Americans has been out of work for 27-weeks or more.

The employer mandate tax punishes businesses who hire additional workers – a business with 49 workers that does not offer government-approved insurance and hires an additional worker suddenly would have to pay a $40,000 fine to the government, if even one of these employees receives a subsidy in the exchange.

CBO has said that the costs of the employer mandate will be passed to workers, who will see lower wages, fewer full-time jobs, and more outsourcing.

Although the employer mandate won’t come into existence until 2014, incentives to keep companies small such as this one will be felt today as employers plan for the future and see this looming tax increase.

This amendment would provide an incentive to favor the hiring of unemployed workers – this could help lower the unemployment rate, but also create an artificial preference for hiring unemployed workers instead of workers who are unemployed.

It is unclear how long a newly hired unemployed worker would be exempt from the mandate tax under this amendment.

Enzi Motion to Commit to Strike Employer Mandate

Here’s my colleague Jon Lieber’s analysis of Senator Enzi’s motion to strike the employer mandate…
Senator Enzi has offered a motion to commit the health care bill to the Finance Committee with instructions to strike the employer mandate with an offset.
Summary
• The health care bill requires that all employers with at least 50 full-time employees offer their employees the “opportunity to enroll in minimum essential coverage under an eligible employer-sponsored plan.”
• Minimum essential coverage generally means coverage that covers at least 60 percent of the actuarial value of a full-coverage plan.
• If an employer fails to offer such coverage, and at least one full-time employee of the employer receives a premium tax credit through the exchanges created by the bill, a tax is levied on the employer equal to $2,000 multiplied by the total number of employees employed by the employer (the first 30 employees are exempt from that count).
• This is known as a “free rider” penalty, since it is designed to punish employers who do not offer government-approved coverage, if their employees receive a tax credit in the exchange.
• This tax raises $52 billion over the next ten years.
• The Enzi MTC would require the Senate Finance Committee to strike this job-killing mandate, and pay for it with an offset.
Considerations
• The free rider penalty is a tax on workers and take-home pay.
• The Congressional Budget Office has repeatedly said that the increased costs of the employer mandate will be shifted to workers in the form of lower wages.
o Employers may also respond by cutting jobs (particularly for low-income workers), outsourcing more jobs, or relying more on part-time workers.
• An employer mandate will be especially harmful for small businesses that employ low-income wage workers at or near the minimum wage.
o A study by Harvard Professor Kate Baicker found that low-income, minority workers would be the most affected by an employer mandate. Thus, among the uninsured, those with the least education face the highest risk of losing their jobs under employer mandates.
• Employers may respond to the higher costs resulting from the mandate with fewer hours, increased outsourcing, or reliance on part-time workers.
• Workers, not employers, bear the cost of employer mandates.  Then Congressional Budget Office Director Peter Orszag said, “The economic evidence is overwhelming, the theory is overwhelming, that when your firm pays for your health insurance you actually pay through reduced take-home pay. The firm is not giving that to you for free. Your other wages or what have you are reduced as a result. I don’t think most workers realize that.”  This mandate would require firms to pay for health insurance, resulting in lower wages.
• The CBO wrote that creating different penalties for full and part time workers “would increase incentives for firms to replace full-time employees with more part-time or temporary workers.”
• According to CBO, a “free-rider” penalty cause the greatest losses disproportionally among low-income workers.
• Mandating that employers offer coverage is an additional financial burden on businesses, especially small businesses, which are already struggling with a slow economy and rapidly escalating health care costs.
• Small and medium sized businesses, even those with over 50 employees, are a primary engine of economic growth and are particularly vulnerable to any new costs or mandates.