• www.CAGW.org

    Got Waste?
    Please visit www.cagw.org

    Register Now


    porker of the month blue

    Porker of The Month


    Find us on Facebook Find us on Facebook
  • August 2014
    M T W T F S S
    « Jul    

Control, Alt, Delete

Control, Alt, Delete seems to be the standard M.O. for the Obama Administration when they want to extricate themselves from politically damaging, and possibly criminal, behavior.  Deleting emails, using alias emails, crashing or losing computers seem to be some of their favored tactics.*

Most informed citizens are well aware of Lois Lerner’s lost emails due to a crashed computer drive.  Ms. Lerner, as you will recall, was the former director of the Exempt Organizations Unit at the IRS and is in the center of a continuing congressional investigation into the agency’s targeting of conservative groups that had applied for tax-exempt status.  One May 7, 2014, the House of Representatives approved a contempt citation for Ms. Lerner for refusing to cooperate with Congress.

You may also recall that the IRS Commissioner John Koskinen told the House Committee on Oversight and Government Reform the agency had “lost” Lerner’s emails that were “to and from other IRS employees from a period of January 2009 – April 2011 due to a computer crash.”  Of course, this is the precise time period that Congress was investigating the IRS’s targeting of conservative groups.  The commissioner was called before the Oversight committee June 23, 2014 to explain how the emails were lost and why it took so long for the IRS to inform Congress.

Now more emails have gone missing, this time within the Department of Health and Human Services.  On August 7, we learned emails belonging to the Center for Medicare and Medicaid Services (CMS) Administrator Marilyn Tavenner had been deleted.  The committee had subpoenaed the emails ten months ago as part of their investigation of the hugely flawed, $677 million HealthCare.gov website, the Obamacare federal exchange internet portal.

In a press release, Chairman Darrel Issa of the Oversight and Government Reform Committee was quoted:  “Today’s news that a senior HHS executive destroyed emails relevant to a congressional investigation means that the Obama Administration has lost or destroyed emails for more than 20 witnesses, and in each case, the loss wasn’t disclosed to the National Archives or Congress for months or years, in violation of federal law.  It defies logic that so many senior Administration officials were found to have ignored federal recordkeeping requirements only after Congress asked to see their emails.  Just this week, my staff followed up with HHS, who has failed to comply with a subpoena from ten months ago.  Even at that point, the administration did not inform us that there was a problem with Ms. Tavenner’s email history.  Yet again, we discover that this Administration will not be forthright with the American people unless cornered.”

These latest digital malfunctions and malfeasance is nothing new with the current administration.

Many will recall how former Environmental Protection Agency (EPA) Administrator Lisa Jackson used a non-government email account with the name “Richard Windsor” to communicate with outside environmental activist groups.  She also used her alias email to communicate internally with EPA staff.

Ms. Jackson was not the only one to use an alias email.  So did Department of Justice Assistant Attorney Lanny Breuer during the gun-smuggling Operation Fast and Furious program, Secretary of Labor Tom Perez while he was an attorney within the Department of Justice’s Civil Rights Division, and the aforementioned Lois Lerner.

It is believed these alias accounts were created to avoid Freedom of Information Act, or FOIA, requests.

On Monday, August 11, the New York Post reported that 61 computers assigned to U.S. Census Bureau in Philadelphia went missing, just two months before the November 2012 presidential election.  Eleven of these computers were assigned to supervisors, which have the ability to manipulate the data that is collected.  The reporter, John Crudele, mentions that the unemployment rate and consumer price index had been manipulated in the Philadelphia office in the past and that sources have claimed falsification of data was occurring in other Census regions (there are six), including Philadelphia, around the time of President Obama’s re-election effort.

After reviewing emails from the Philadelphia Census office obtain through a FOIA request, Crudele believes there is evidence that “something was amiss at the agency, which releases information that is so important to the Federal Reserve, financial markets, corporations, and retirees, whose annual inflation adjustments are based on the work done by Census field reps.”

Crudele mentions that during the time of the missing computers, the Census was in the process of conducting the Household Survey, which produces the unemployment rate.  September’s 2012 results were significant when they were announced in October 2012.  As you may recall, the unemployment rate dropped an “improbable decline” from 8.1 percent to 7.8 percent.

According to Crudele, the Census Bureau has refused to release 600 emails between workers in the Philly office because they “didn’t fit with the purview” of his request.  The New York Post is appealing the decision.  No doubt, this episode will require more investigative work, either by the New York Post, Congress, or other entity.

Last week, 47 Inspectors General sent a rare joint letter to the oversight committees in Congress complaining about their ability to get access to government records, particularly within the Justice Department, the EPA, and the Peace Corps.  They wrote:

We have learned that the Inspectors General for the Peace Corps, the Environmental Protection Agency (in his role as Inspector General for the Chemical Safety and Hazard Investigation Board) and the Department of Justice have recently faced restrictions on their access to certain records available to their agencies that were needed to perform their oversight work in critical areas. In each of these instances, we understand that lawyers in these agencies construed other statutes and law applicable to privilege in a manner that would override the express authorization contained in the IG Act.  These restrictive readings of the IG Act represent potentially serious challenges to the authority of every Inspector General and our ability to conduct our work thoroughly, independently, and in a timely manner.”

The Chairmen and Ranking Members of the House and Senate oversight committees in turn sent a letter to White House’s Office of Management and Budget Director Shaun Donovan.  Expressing their alarm about the numerous roadblocks the IGs are facing in getting access to documents, they stated:

We write to express our grave concern about difficulties that certain Inspectors General (IG) have encountered in trying to obtain documents from their respective agencies. Timely and complete access to information is essential if Inspectors General are to perform their missions, and their rights to information are clearly provided for in the Inspector General Act of 1978.  We call on you to underscore this important fact and enlist your office to help ensure that agencies comply… This is not the first we have heard of these problems.  Our offices have already spent time working with the affected IGs in an effort to try and help them gain the needed information.  Indeed, Chairman Issa and Ranking Member Cummings examined some of these concerns during hearings before the House Committee on Oversight and Government Reform this year.”

They close by saying:

We trust that you share our commitment to the mission and effectiveness of the Inspectors General, and ask that you take affirmative steps to ensure that all agencies and their staffs are properly informed and trained on the requirements of the Inspectors General Act so that IGs receive the information they need to do their jobs.”

Unfortunately, it has become too clear that many officials in the Obama Administration do not share a commitment to allow investigators to do their jobs.  Let us hope the OMB Director follows through.


One hour after this blog was posted, The Hill, a Capitol Hill newspaper, reported that House Republicans on the Energy and Commerce Committee have accused CMS Director Marilyn Tavenner of telling staff to delete emails regarding the ObamaCare rollout.  The Hill writes,

House Republicans on Friday accused a top Obama administration health official of telling staff to delete an email related to the healthcare law’s rollout last fall.

In a letter to Centers for Medicare and Medicaid Administrator Marilyn Tavenner, the Republicans point to an Oct. 5 email from Tavenner to staff about how to handle calls from people applying for ObamaCare.

In the first line of the email, Tavenner writes ‘please delete this email but see if we can work on call script.’

Republicans in their letter ask why Tavenner wanted the email deleted, and whether she has asked for other emails to be deleted.

‘This contradicts … [the claim] that your practice was to instruct subordinates to retain copies of e-mails,’ said the lawmakers, including House Energy and Commerce Committee Chairman Fred Upton (R-Mich.) and Oversight Subcommittee Chairman Tim Murphy (R-Pa.).

Asked for comment, the CMS did not answer why Tavenner requested the email to be deleted.”

What a Week!

Last week, important but opposing court opinions were released within hours of each other on two similar cases involving the Affordable Care Act (ACA), often referred to as Obamacare. The U.S. Court of Appeals for the D.C. Circuit released the opinion on Halbig v. Burwell, formally Halbig v. Sebelius, while the U.S. Court of Appeals for the Fourth Circuit released its opinion on King v. Burwell, formally King v. Sebelius. (Because former Health and Human Services Secretary Kathleen Sebelius resigned, newly-appointed Secretary Sylvia Burwell’s name is now used.)

You may have read what CAGW wrote about these cases in a prior blog.

First, a bit of background information. As you probably know, Obamacare has both state-run and federally-run health insurance exchanges. While certainly the congressional authors had hoped that all states would create their own Obamacare exchange, that did not happen. Only 17 states, including the District of Columbia, created their own exchanges. The remaining states either refused to participate or partnered with the federal government. Thus it is the citizens that take part in the federal exchange that would be most directly affected by any future Supreme Court ruling on this matter.

In both cases, the argument revolved around whether the Internal Revenue Service (IRS) had the authority to allow tax-payer funded subsidies for beneficiaries that participate in the federally-run healthcare exchange. The plaintiffs in Halbig v Burwell argued that the IRS could not, based on the language of the law and congressional legislative history. When the IRS wrote the rule allowing subsidies to be distributed to people in the federal exchange, the plaintiffs argued that decision harmed them because tax credit eligibility can trigger penalties on employers and individuals. The plaintiffs in King v Burwell gave similar arguments.

A February 6, 2014 legal brief by Bert Rein, William S. Consovoy, Michael Connolly, and Ilya Shapiro discussed Halbig v Burwell soon after the United States District Court for the District of Columbia had rejected the plaintiffs’ argument and the plaintiffs were in the process of appealing their case before the U.S. Court of Appeals for the D.C. Circuit.

Rein et al note that there are several “deductions, exemptions, and penalties to the federal tax code” to encourage people to buy health insurance.  They write that the “legislation’s Section 1311 provides a generous tax credit for anyone who buys insurance from an insurance exchange ‘established by the State’ – as an incentive for states to create the exchanges.”  When the “IRS issued a rule interpreting § 1311 as also applying to purchases from federal exchanges” the ruling harmed employers with 50 or more employees that have made a decision not to provide health insurance and are fined for every employee that receives a subsidy in a state exchange, in addition to the tax they must pay for not providing insurance.  The authors add, “the ruling also hurts some individuals, such as David Klemencic, a lead plaintiff in one of the lawsuits challenging the IRS’s tax-credit rule. Klemencic lives in a state, West Virginia, that never established an exchange, and for various reasons he doesn’t want to buy any of the insurance options available to him. Because buying insurance would cost him more than 8% of his income, he should be immune from Obamacare’s tax on the decision not to buy insurance.”

The brief’s authors say that when the IRS expanded the subsidy to people in the federal exchange, Klemenic could then afford to purchase insurance at an amount that was low enough to subject him to the tax for not purchasing insurance.  The authors write, “Klemencic and his fellow plaintiffs argue that they face these costs only because the IRS exceeded the scope of its powers by extending a tax credit not authorized by Congress.”

The D.C. Circuit agreed with the plaintiffs argument, writing, “Because we conclude that the ACA unambiguously restricts the section 36B subsidy to insurance purchased on Exchanges ‘established by the State,’ we reverse the district court and vacate the IRS’s regulation.”

But the U.S. Court of Appeals for the Fourth Circuit said the opposite in its King vs Burwell opinion.  “The plaintiffs contend that the IRS’s interpretation is contrary to the language of the statute, which, they assert, authorizes tax credits only for individuals who purchase insurance on state-run Exchanges.  For reasons [listed in the opinion] we find that the applicable statutory language is ambiguous and subject to multiple interpretations.  Applying deference to the IRS’s determination, however, we uphold the rule as a permissible exercise of the agency’s discretion.  We thus affirm the judgment of the district court.”

Soon after the D.C. Circuit announced its opinion, the Obama Administration declared it would seek an en banc review and would challenge the appeals court ruling.  “We believe that this decision is incorrect, inconsistent with congressional intent, different from previous rulings, and at odds with the goal of the law: to make health care affordable no matter where people live,” said a DoJ spokesperson according to Politico.

Whether the entire D.C. District Circuit takes up the matter is not known at this time but considering most of the judges are Democrat appointees, it is very probable.  If that is the case and they reverse the decision, then there is no conflict between the cases and the Supreme Court would not necessarily have to act.  But the plaintiffs in King v Burwell could also ask for an en banc review and perhaps have their decision reversed, creating conflict again.  Plus, there are two other cases winding their way through the courts that could create conflict concerning the IRS rule.  In any case, most pundits believe ultimately the Supreme Court will weigh in.

Why is Halbig and the other lawsuits so important?  Michael Cannon, of the Cato Institute, and Jonathan Adler, of the Center for Business Law and Regulation at Case Western Reserve University, and who brought the problem with the IRS rule to light, explained why in a Wall Street Journal op-ed on July 22:

Because the ruling forces the Obama administration to implement the Affordable Care Act as written, consumers in 36 states would face the full cost of its overpriced health insurance.  According to one brief filed in the case, overall premiums in those states would be double what they are under the administration’s rewrite, and typical enrollees would see their out-of-pocket payments jump sevenfold.  The resulting backlash against how ObamaCare actually works could finally convince even Democrats to reopen the statute.

At its heart, though, Halbig is not just about ObamaCare.  It is about determining whether the president, like an autocrat, can levy taxes on his own authority.

The president’s defenders often concede that he is doing the opposite of what federal law says.  Yet he claims that he is merely implementing the law as Congress intended.

Days after the Halbig opinion, some enlightening information came to the forefront that will make it difficult for the Obama administration to continue to defend their stance that subsidies are allowed in the federal exchange.  Jonathan Gruber, an economist at MIT, was the chief healthcare adviser to the Obama Administration and helped craft the law.  A video has surfaced, thanks to research by Ryan Radia at the Competitive Enterprise Institute, in which Gruber is giving a speech on January 18, 2012, to Noblis, a nonprofit science, technology, and strategy organization, about the healthcare law.  He states (scroll to 31:25) that people in the federal exchange will not get the tax credits or subsidies even though they help pay the taxes that support Obamacare.  He essentially says he hopes the elected leaders in the states will understand the political problems this scenario would create for them and understand the necessity to create a state-run exchange so their eligible citizens could get a subsidy.

Robert Pear in the July 25 New York Times reported that, “Mr. Gruber backed away from his comments on Friday.  But the remarks embarrassed the White House and could help plaintiffs in court cases challenging the payment of subsidies in 36 states that rely on the federal exchange.”

Pear writes, “In 2009 and 2010, Mr. Gruber was a paid adviser to the administration. The Department of Health and Human Services said in June 2009 that it had awarded a $297,000 contract to him “for technical assistance in evaluating options for national health care reform.” He also provided advice to Democrats in Congress and was an architect of the Massachusetts health care program, a precursor of the federal plan.”

Problem is, another Gruber tape has surfaced.

In addition to the Gruber remarks, which he said before he did not say them, there is a January 11, 2010 letter from Rep. Lloyd Doggett (D-Texas) to former-Speaker Nancy Pelosi (D-Calif), former-Majority Leader Steny Hoyer (D-Md), and the president.  He encourages them to adopt a national exchange, not just state-based exchanges. He says:

The House bill establishes a national insurance exchange, but allows states with the political will and the resources available to establish their own exchanges, as long as the state-based exchange meets the same strong standards as the national health insurance exchange. This approach protects existing state exchanges and allows innovation, while ensuring that consumers enjoy the same coverage and protections afforded in the national exchange…

As you know, the Senate bill does not establish a national health insurance exchange. Instead, each state is required to set up its own exchange. If the state does not set up the exchange, then the Secretary of Health and Human Services is required to set up an exchange for the state.

Doggett is particularly concerned about his home of Texas and believes it will not participate in creating an exchange and therefore a national exchange is needed.  He writes “millions of people will be left no better off than before Congress acted” if the Senate bill becomes law.

Of course, the Senate bill did become law.

If these cases make it to the Supreme Court and a majority of Justices believe that the law says what says and hold up Halbig v Burwell, then citizens in the federal exchange will no longer have access to taxpayer-funded subsidies.  Unless Congress acts, it could cause Obamacare to collapse.

Further information:

Here is a rundown from Jacob Huebert at the Illinois Policy Institute on what to expect in the courts regarding these cases.

If you are interested in following this issue more closely, Michael Cannon has a website about the various lawsuits, which he updates regularly.

Agency Charges Taxpayers for Free Reports

According to its website, The National Technical Information Service (NTIS) seeks to “promote American innovation and economic growth by collecting and disseminating scientific, technical and engineering information to the public and industry, by providing information management solutions to other federal agencies, and by doing all without appropriated funding.”

However, with the advent of the internet, the need for the services provided by NTIS has dwindled.  According to a November 2012 Government Accountability Office (GAO) report, “Of the reports added to NTIS’s repository during fiscal years 1990 through 2011, GAO estimates that approximately 74 percent were readily available from other public sources.”  Even more troubling is that while NTIS charges for its information, the GAO report estimated that “95 percent of the reports available from sources other than NTIS were available free of charge.”

Making matters worse, “over most of the last 11 years, its costs have exceeded revenues by an average of about $1.3 million for its products.”  Sens. Tom Coburn (R-Okla) and Claire McCaskill (D-Mo.) have sponsored legislation aimed at eliminating the NTIS.  Introduced on April 3, 2014, the Let Me Google That for You Act has been referred to the Committee on Commerce, Science, and Transportation.

Sen. Coburn’s 2013 Wastebook, states that one report “sold by NTIS is the 2009 Public Health Service Food Code produced by the Department of Health and Human Services, which is available for $69.  Alternatively, the report is available for free on the Food and Drug Administration’s website.”  Comically, NTIS also sells Sen. Coburn’s report, which prompted the senator to send a letter to the agency’s director instructing him to stop selling documents which can be accessed for free on the his website.

Sens. Coburn and McCaskill are not the first government officials to suggest eliminating the program.  In August 1999 then-Secretary of Commerce William Daley proposed closing the NTIS by the end of fiscal year 2000.  The reasoning behind the Secretary’s recommendation was that “he believed that declining sales revenues would not continue to be sufficient to recover all of the agency’s operating costs.”  Secretary Daley’s prediction has proven to be prophetic.

In a Financial and Contracting Oversight subcommittee hearing on the afternoon of July 23, 2014, McCaskill asked, “Why would anyone buy publications from NTIS when they’re free on the Internet?”  The Senator also commented, “Can we as a Congress come together and cut bureaucracy when it is duplicative and unnecessary?”  Lets hope so, because disposing of the agency could save as much as $50 million per year.

At the same hearing, Coburn told NTIS Director Bruce Borzino, “Our goal is to eliminate you as an agency.”  Hopefully lawmakers will follow through on this objective.  The NTIS has stockpiled government reports since 1950, its time the program was put out to pasture.

Senate Plans Short-term Fix to Taxes on Internet Access

If Senator Harry Reid (D-Nev.) gets his way, taxes on Internet access and other discriminatory or duplicate taxes will only be staved off until 2015, rolling the final decision on whether to make it permanent or to attach other more controversial measures onto the bill either for consideration during a lame duck session or until next Congress.

According to a July 24, 2014 Roll Call article, the current plan is to pass a short-term measure extending the existing moratorium on Internet taxes until early 2015.  A May 7, 2014 article in the Wall Street Journal estimated that if legislation extending or making permanent the current moratorium on Internet taxes is not passed before November 1, 2014, an average household could pay an additional $50 to $70 per year if their state or local government decided to apply either sales or telecommunications taxes to Internet access.

According to an article in The Hill on July 24, 2014, a Senate aide claimed “The sponsors wanted to move that bill before the August recess, but we simply ran out of time on the Senate floor.”  This inaction on the part of the Senate does not take into account that the House just passed H.R. 3086, the Permanent Internet Tax Freedom Act with wide bi-partisan approval and similar legislation, S. 1431, the Internet Tax Freedom Forever Act, also has bi-partisan support from a majority of Senators.

Waiting until September to pass legislation in the Senate also does not account for the need to conference bills between the two chambers, should the Senate bill contain different provisions than the bill passed by the House on July 15, 2014.  This means more delays while the clock ticks away toward the November 1, 2014 expiration of the moratorium.

It is unfortunate that the leadership in the Senate has decided to kick the can down the road instead of protecting American citizens from new taxes on their Internet access or duplicative and discriminatory taxes on Internet commerce.

House Passes Permanent Ban On Internet Taxes

Consumers across America are increasingly using the Internet to shop, apply for jobs, perform schoolwork, and email one another.  In 2012, the Federal Communications Commission found in its annual report on advanced communications capabilities that 95 percent of Americans have access to broadband Internet services.  According to the International Telecommunications Union, 84.2 percent of individuals in the U.S. currently use the Internet.

In 1998, the Internet Tax Freedom Act (ITFA) was first enacted as a temporary ban on state and local taxes on Internet access.  The law also banned multiple or discriminatory taxes on Internet commerce.  The moratorium on these taxes has been extended three times, with the most recent extension occurring in 2007.  On November 1, 2014, the current moratorium expires.

On July 14, 2014, the Council for Citizens Against Government Waste asked members of the House of Representatives to support passage of H.R. 3086, the Permanent Internet Tax Freedom Act.  This legislation makes the ban on these taxes permanent, creating certainty for consumers that their Internet access will never be subject to taxation.  On July 15, 2014, the House of Representatives approved H.R. 3086 by voice vote.

During House debate on H.R. 3086, Rep. Zoe Lofgren (D-Calif.) stated “The moratorium is one of the reasons for the huge growth in the digital economy.  The Internet wouldn’t be what it is today without affordable Internet access.  And, by the way, this tax relief is not to companies.  It is to individuals who access the Internet.”

Rep. Doug Collins (R-Ga.) stated “This legislation ensures that no person is discouraged from accessing the Internet and experiencing its transformative power.  The Internet is a tool for democracy and education.  It is an outlet for free expression and the megaphone for those who were previously ignored.  It connects individuals and is a means for creating entrepreneurship.”

One of the many problems with taxing the Internet is that when something becomes more costly, people will engage in less of it.  As the economy will undoubtedly continue to be more digitally-focused, protecting users of the Internet from onerous new taxes is critical to continued job creation, economic growth, and social interaction.

H.R. 3086 now moves to the Senate for consideration, where a similar measure, S. 1431, the Internet Tax Freedom Forever Act was introduced by Senators Ron Wyden (D-Ore.) and John Thune (R-S.D.).

Gallup: “Uninsured Rate Sinks to 13.4%…Significant Decline in Uninsured Rate!” Really Gallup? Really?

Gallup released a poll yesterday with the blaring headline, “In U.S., Uninsured Rate Sinks to 13.4% in Second Quarter; Significant Decline in Uninsured Rate Across Age Groups Since the End of 2013.”  But before the Obama administration and those that support Obamacare take credit for this supposed sharp decrease in the uninsured, one needs to think about the time period that Gallup reviewed.  The polling organization admits that the figure “is the lowest quarterly average recorded since Gallup and Healthways began tracking the percentage of uninsured Americans in 2008.”

Has Gallup forgotten that the recession started in late 2007 and ended in 2009?  (For the millions who have given up looking for work, the recession has never ended but I digress.)  Considering that approximately 55 percent of all Americans have employer-based health insurance, and that 68.2 percent of those that are employed between the ages of 18-64 receive their insurance either through their employer or another person’s employer, it should not be surprising that the number of uninsured went up when unemployment went up.  In 2010, the peak of the unemployed was at an average 9.6 percent and the uninsured was at 16.4 percent.

But, as the unemployment rate started to fall, the uninsured continued to climb and reached its peak of 18.0 percent in the fall of 2013.  Why?


Bureau of Labor and Statistics Data – Percent of Unemployed / 2008-2014

BLS Figures

It’s really very simple and perhaps Gallup just forgot about all news concerning Obamacare in the fall of last year.  Millions of people, primarily those that purchased their health insurance in the individual market, such as the self-employed, began to lose their insurance plans in 2013 because they did not meet Obamacare’s overly-restrictive and expansive mandates.  What are the mandates that are caused insurance premiums in the individual market to increase on average by 49 percent between 2013 and 2014?  Single young men and menopausal women, for example, must carry insurance policies that cover maternity and pediatric care. Mental health and substance-use disorder services must be purchased, even if an individual has never had a mental health or substance abuse problem.

Perhaps Gallup forgot that many people became uninsured because they could not purchase a plan through the malfunctioning federal and state exchanges, right up and into the new year.  It was because they were forced to purchase an Obamacare compliant policy that caused the precipitous drop in uninsured to occur between the 4th quarter in 2013 and 1st quarter in 2014.

Obamacare caused the uninsured rate to climb to 18 percent, now Gallup wants to credit it for dropping the uninsured rate to 13.4 percent.

The only problem is the uninsured rate was 14.6 percent in 2008, before Obamacare was even draft legislation.  In other words, Obamacare caused a complete upheaval in our healthcare system, at a cost of $41 billion to taxpayers in 2014, with an estimated cost of 1.5 trillion by 2024, to drop the uninsured rate by 1.2 percent.

That’s a whole lot of money that could have been better spent with much better healthcare results for all Americans.

Highway Trust Fund Nearing the End of the Road

The Highway Trust Fund is a transportation fund financed by an 18.4 cents per gallon gas tax extracted from drivers every time they fill their tank.  The tax proceeds are then used to fund work on the country’s rails, bridges, and roadways.   Unfortunately, according to a June 2014 CBO report, during the last decade “outlays from the Highway Trust Fund have exceeded revenues by more than $52 billion, and outlays will exceed revenues by an estimated $167 billion over the 2015–2024 period if obligations from the fund continue at the 2014 rate.”  The fund’s decline, brought about by inflation and increased fuel efficiency in new vehicle models, has placed the federal government in the all-too-familiar position of spending more money than it generates.

The solution preferred by many members of Congress would be to shovel more money into the fund.  However, given Congress’ poor track record with transportation spending, it is difficult to believe that additional funds would be allocated to their highest and best use.

Transportation appropriations bills have long been rife with waste.  Since FY 1991, members of Congress have added 18,174 earmarks costing taxpayers $32.5 billion to the transportation appropriations bills.  These include numerous museums, opera houses, and beautification projects such as streetscaping and bike paths over the years.  Before pumping more money into the fund, Congress should first ensure the bill is free of special interest handouts.

Perhaps the most efficient way to address the current dilemma is not to increase federal taxation, but rather to hand over both revenue generation and decision making power to the states.

An interesting idea has been proposed by Rep. Tom Graves (R-Ga.), who believes the best road forward is to “reduce the tax over five years to 3.7 cents/gallon, which could produce around $7 billion, and that money would be sent to states through block grants.”  After that, states would be free to raise their own gas taxes to pay for infrastructure as they see fit.  The contraction of federal taxation would allow for states to decide what is best for their residents and would eliminate the moral dilemma of having the residents of one state pay for residents of another.

A 2011 study by The Heritage Foundation found that in 2009 there were 28 donor states.  Worse yet, “Texas received only an 83.5 percent payback, costing it $672 million in underpayments that year.  Also in 2009, Florida received just 86 percent back, Arizona received 92 percent, and South Carolina received 85 percent.”  Regrettably, this version of robbing Peter to pay Paul has swindled Texans and others for quite some time, the tabulation of “return ratios over the past 53 years reveals that, among some of the 24 long-term losers, Texas received just 80.5 percent, Oklahoma received 86.3 percent, and Georgia received 85 percent.”

The task before legislators is to maintain the country’s infrastructure while foregoing increased funding for pet projects.  Time will tell if they are successful.

Here We Go…AGAIN!

President Obama has told the Congress and the country that he will be using his pen and phone to get his priorities implemented.  That has meant bypassing Congress and changing, or ignoring, current law.  It is well known that this has occurred several times during the horrendous rollout of the Affordable Care Act (ACA / Obamacare).  According to the Galen Institute, a healthcare public policy research organization, the Obama administration has made 23 changes to the law through administrative fiat.  The president is wielding his pen and phone in other public policy areas as well, such as immigration and environmental policy, with almost always controversial results.

This unilateralism is happening in more esoteric areas as well, which doesn’t tend to attract the attention of the main-stream news media.

In May, CAGW wrote about the 340B federal drug discount program and why Congress needs to hold hearings about the program and reform it.  The 340B program requires pharmaceutical companies that participate in Medicaid to provide heavily discounted outpatient drugs to “covered entities,” such as certain kinds of hospitals, federally qualified health centers, specialized clinics, which provide general health services as well as treatment for specific diseases to uninsured, low-income people who do not qualify for Medicaid or Medicare.  The “covered entities” that participate in the program are supposed to pass along the savings to low-income patients, but due to vague language in the 340B law, this is not always happening.

Instead, many hospitals and the pharmacies they contract with are generating millions of dollars in profit.  Both the General Accountability Office and the Department of Health and Human Services Office of the Inspector General have been critical of the Health Resources and Services Administration (HRSA), the agency that oversees the 340B program, pointing to an absence of oversight by HRSA and for not providing clear guidelines.  As always, the consumers and taxpayers end up paying for a government program gone haywire.

The 340B program was expanded under the ACA, broadening “covered entities” to include other providers such as critical-access hospitals, sole community hospitals, and free-standing cancer hospitals that can take advantage of the discounted drugs.  In doing so, it also aggravated the problems already present in the discount program.

For example, an article in an October 2013 Clinical Oncology News and a May 2014 IMS Institute for Healthcare Informatics’ study, entitled Innovation in Cancer Care and Implications for Health Systems, demonstrate how the 340B programs is driving up the cost of cancer treatment for patients and enriching hospitals instead.

One type of drug that was not originally included in ACA’s expansion of the 340B discount program was an orphan drug.  A drug receives orphan status from the Food and Drug Administration (FDA) when it is intended for use in the treatment, diagnosis, or prevention of a rare disease or disorder that afflicts fewer than 200,000 people in the United States.  Examples of such diseases or disorders are cystic fibrosis, Lou Gehrig’s Disease, Tourette’s Syndrome, Hamburger Disease, and Job Syndrome.  Pharmaceutical companies receive special incentives to create drugs to treat these types of diseases, such as tax credits and seven years of market exclusivity.

The administration decided to take matters in its own hands and on May 20, 2011, HRSA proposed a regulation that changed what the ACA law said about excluding orphan drugs from the discount program.  The agency proposed it would allow certain hospitals to purchase orphan drugs at the deeply discounted price, provided the drugs would be used for a disease or condition other than for which the drug got its orphan status from the FDA.  Sometimes an orphan-designated drug can be used to treat a non-orphan disease, similar to when a drug is used “off-label.”  When a medication is being used “off-label,” it means it is being used in a way that has not been explicitly approved for that indication by the FDA.  This is common medical practice, particularly in the field of oncology.  While pharmaceutical companies may not market off-label uses, a doctor can prescribe the use of a drug for any condition he or she feels is appropriate.

In July 2013, HRSA finalized the rule, making it official administration policy that utilizing an orphan drug for a non-orphan disease or condition would entitle a “covered entity” to get the discount.  Sen. Orrin Hatch (R-Utah) was strongly critical of the rule and wrote a letter to HRSA Administrator Mary Wakefield, stating the rule completely ignores the language of ACA and noted that it would be practically impossible for a drug company to determine whether an orphan drug was being used for a non-orphan condition or not.

The Pharmaceutical Research Manufacturers of America (PhRMA) immediately sued HRSA in September of 2013, stating the agency lacked the authority to change the clear meaning in ACA with respect to the orphan drugs exclusion from the 340B program.  It stated the rule would also create financial damage and weaken the incentive for companies to develop orphan drugs. On May 23, the U.S. District Court for the District of Columbia agreed with PhRMA’s argument and invalidated HRSAs rule.

In the wake of the ruling, in what has become a familiar executive branch gesture, HRSA simply thumbed its nose at the court and stated it would stand by its interpretation of the orphan drug exclusion language.

This action is another reason Congress must conduct oversight hearings on the 340B program and reform it to ensure it serves its original purpose.

Meanwhile, the lawlessness continues and patients and taxpayers will eventually pay the price.

Is Another Special Exemption from Obamacare on the Way?

Last week on June 18, Inside Health Policy reported that lobbying efforts were underway by organizations that represent Medicaid-dependent providers, such as home care services, establishments that care for the disabled, hospice care facilities, etc., to get a special carve-out from the employer health insurance mandate found in the Affordable Care Act (Obamacare.)  Under the health reform law, an employer with 50 or more employees is required to provide “affordable” health insurance and if they do not, the employer must pay a fine of anywhere between $2,000 to $3,000 per employee, depending on whether or not the employee gets a taxpayer subsidized credit in an Obamacare exchange.  However, because of the disastrous roll-out of Obamacare and other political concerns, the Obama Administration has delayed the employer mandate until January 1, 2015 or 2016, depending on the number of employees an employer has.

American Network of Community Options and Resources (ANCOR), which according to Inside Health Policy, represent “overwhelmingly Medicaid-dependent providers that rarely have any other source of revenue” are actively engaged in getting relief for their membership.  ANCOR’s Vice President of Policy Barbara Merrill said that although the majority of their members provide health insurance to their employees, over half believe their administrative costs will increase between 15 and 50 percent.  ANCOR is asking the Centers for Medicare and Medicaid Services (CMS) for some sort of relief such as to have the taxpayers reimburse the employer’s penalty for not providing health insurance.  Another solution they are looking at is some sort of transitional relief beyond what CMS has already done, such as providing limited but targeted federal matching tax dollars to the states in order for the providers to buy time to figure out solutions to the mandate problem.  One thing that Merrill says they are not advocating for is repeal from or an exemption to the employer mandate.  Nor are they looking to change to the definition of a full-time employee, which under Obamacare is a person that works 30 hours or more.

But according to Inside Health Policy report, other advocacy groups for Medicaid providers are looking at the aforementioned policy options.  The National Association for Home Care and Hospice (NAHC) wants a further delay in the employer mandate and other ideas, such as exempting home care workers from the mandate, changing the definition of a full-time employee, and more taxpayer funding to either pay for health insurance for the employer’s employees or the employer’s penalty if insurance is not provided.  Additional suggestions include allowing the employer’s full-time workers to also enroll in Medicaid, a “pass-through payment for commercial insurance enrollment,” and reducing administrative requirements to save in overall employer costs.

The organizations representing the Medicaid-dependent providers have also been successful in getting at least two congressional members involved in their issue.  The June 24 Inside Health Policy edition provided a copy of a letter Senator Tammy Baldwin (D-WI) and Rep. Ron Kind (D-WI) sent to Secretary of Health and Human Services (HHS) Sylvia Matthews Burwell on June 20.  They write about their concern the Obamacare employer mandate will have on Medicaid dependent home and community-based providers.  They argue that these organizations, which service Medicaid patients, run on “very slim margins” and have “raised unique concerns about complying with the ACA’s [Affordable Care Act] employer responsibility requirements.”  They state, “Medicaid dependent home and community-based providers could face significant financial burdens in complying with the employer responsibility requirements in the ACA.”  The elected officials close by saying, “In light of recent decisions to provide for transition relief with respect to implementing requirements in the new law, we request that HHS fully explore options to support Medicaid dependent home and community-based providers in complying with the ACA’s employer mandate responsibility requirements.”

Inside Health Policy notes that a congressional aide said it is unlikely any change can be made legislatively considering the political animosity around Obamacare and that the best approach is to work with CMS to get the changes.  The organizations have asked CMS to call a meeting that would include all the stakeholders to discuss ways to fix the employer mandate problem.  No doubt the letter from Baldwin and Kind will spur the administration to find some sort of solution for these types of employers.

CAGW agrees that Medicaid-dependent providers are facing a severe burden complying with the Obamacare employer mandate.  But so aren’t thousands of other employers who also operate on very thin margins, are struggling to stay afloat in a prolonged weak economy, and pay the taxes that fund Medicaid.  CAGW believes the employer mandate should be delayed permanently for all employers, along with the individual mandate.  Now those are some real solutions.

Unfortunately, the problem with Obamacare, or any federal program for that matter, is it invites the federal government to play politics and treat groups it favors differently than those it does not.  Expect a special carve-out for the Medicaid-dependent providers before the end of the year.

Here’s another thought.  Any governor thinking about expanding Medicaid to their citizens under the age of 65 with incomes up to 133 percent of the federal poverty level should pay close attention to what Baldwin and Kind stated in their letter about the government-run health insurance program.  They said, “The challenging economic conditions and tight budget environment have placed significant strain on state Medicaid programs in recent years.  As a result, provider payments have been cut or frozen across much of the country.”

Since Medicaid is in such fiscal trouble, why would any political leader want to bet their state’s budget on the belief that the federal government will provide 90 percent of the funding to expand Medicaid ad infinitum?  Governors Corbett (R-Penn.), McAuliffe (D-Va.), Pence (R-Ind.), and Herbert (R-Utah) are you paying attention?

CAGW has written about the folly of Medicaid expansion that includes a January Waste Watcher entitled “Medicaid Expansion – A Wolf in Sheep’s Clothing.”

House Judiciary Tackles GSA Waste

House Judiciary Tackles GSA Waste
By Colin Gamm

The House Judiciary Subcommittee on Courts, Intellectual Property and the Internet held a hearing today on two cases of wasteful courthouse renovations.  The hearing topic was entitled “GSA’s Failure to Meet the Needs of the Judiciary: A Case Study of Bureaucratic Negligence and Waste.”

The full Judiciary Committee is chaired by Representative Bob Goodlatte (R-Va.), who has actively confronted GSA about its renovation of the Poff Federal Building in his home district.  The project has been marred by a variety of missteps, including improper procedure, cost overruns, and serious disruption of its primary tenants, the United States District Court of Western Virginia and a regional Veterans Affairs office.

The Poff renovation, initially budgeted at $51 million, will likely end up costing taxpayers around $80 million once the final stage of the project is completed.  The Inspector General of GSA released a report revealing that GSA officials violated federal procurement laws while contracting the project, and in response to Rep. Goodlatte’s inquiries, GSA admitted that it had not conducted a full cost-benefit analysis until after the contracting was complete.  As for the tenants, the courts were subject to noisy, disruptive construction, while the V.A. was forced to scatter to multiple new offices before returning this year.

The other case concerned a landscaping project for the Pete V. Domenici U.S. Courthouse in Albuquerque, New Mexico.  While judges initially asked only that GSA fix a leak and replace an inefficient species of grass, they received much more: a six-month, $3.4 million landscape renovation, almost a tenth of the total cost of the courthouse.

Witnesses at the hearing included William P. Johnson, Judge for the United States District Court of New Mexico; Glen E. Conrad, Chief Judge, and Jennifer Smith, Architect and Project manager, of the United States District Court of Western Virginia; and Michael Gelber, Deputy Commissioner of GSA’s Public Building Service.