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  • April 2014
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Eight Dirty Words… and the Mother of All Debt Bombs!

The April 16, 2014 article, “Senators Miss Sperling at Key Point for Housing Bill,” by Jon Prior, Kevin Cirilli and MJ Lee, probably should have appeared on “Page 6” of the New York Post – renowned for its gossipy tidbits about the Big Apple’s glitterati – instead of p. 10 of Politico, since it was a puff piece on Gene Sperling rather than a substantive analysis of a critical GSE reform effort.  For taxpayers, it is a whole lot less important to know which political grandee is not included in the GSE reform negotiations than it is to know what is included in the draft bill unveiled by Senate Banking Committee Chairman Tim Johnson (D-S.D.) and Ranking Member Mike Crapo (R-Idaho).

The draft contains the following eight “dirty words,” guaranteeing an unprecedented bailout of the mortgage market if there is another housing downturn: “full faith and credit of the United States.”

As a result of these eight words, the national debt would jump by $5.1 trillion, or 29 percent, with one stroke of President Obama’s famous pen, from an already staggering $17.6 trillion to $22.7 trillion.  The “explicit guarantee” of Fannie Mae and Freddie Mac debt would occur despite the well-established fact that the GSEs’ bonds are not backed by the Treasury.  This action is both unnecessary and unaffordable; for this and other reasons, CCAGW opposes the draft bill.

Indeed, the only “complaint” about the legislation identified in the article is how the left laments the bill’s lack of emphasis on promoting affordable housing.  But that was a key factor in precipitating the mortgage crisis in the first place: creating a public policy objective for a financial institution.  The results are well-known and not particularly pretty.

When it comes to the prospect of another federal government takeover (and inevitable mismanagement) of a huge swath of the private sector, members of Congress should not be using eight words.  Instead, they should use three:  “Just say NO.”

 

Tax Day – For Some of Us

For most Americans, April 15 is a day of fear and loathing.  It is time to account for all of the taxes owed to various levels of government.  If someone has overpaid, money will be coming back.  If a taxpayer has underpaid, a (sometimes large) check must be written.  But if someone earns money that the government never knows about and therefore doesn’t pay any taxes, April 15 is just another day on the calendar.

These people do their best to make sure that Uncle Sam and state tax collectors don’t even know that they exist.  The scofflaws include pirates and counterfeiters, who can rake in anywhere from $120,000 to $10 million (possibly even up to $100 million).

The goods that these crooks are peddling can be as innocuous as “branded” handbags sold cheaply on the street corner, or as deadly as a counterfeit power strip or holiday light, missing that all-important copper grounding wire in its construction.  However, even if the goods seem harmless, the theft, importation and sale of counterfeit or pirated intellectual property (IP) have a major impact on the economy.  The Organization for Economic Development (OECD) concluded in November 2009 that international trade in counterfeit and pirated goods may have accounted for more than $250 billion in 2007.  This is a sizable dent in the global economy.

On April 12, 2010, the Government Accountability Office (GAO) reported on the negative effects of IP counterfeiting and piracy in the U.S.  According to the report, from 2004 to 2009, the Department of Homeland Security seized more than $1.1 billion in IP-infringing goods, ranging from apparel to cigarette to pharmaceuticals.

According to GAO, the U.S. IP theft causes slower economic growth, lower tax revenue, and reduced innovation, as well as declining trade with other countries who have weaker IP rights enforcement.  In addition, because of increased counterfeiting and piracy, the government has incurred higher enforcement costs and greater risks to supply chains for both national security and safety reasons.

On March 21, 2014, a member of a massive counterfeit goods conspiracy was sentenced in federal court to 38 months in prison.  The 35 containers of counterfeit goods that were confiscated in that case by law enforcement officials included cigarettes, handbags, and sneakers with a potential retail value of more than $300 million if the merchandise had been legitimate.  The sellers certainly were not going to post their earnings on an IRS Form 1040.  That means that everyone else has even more to fear and loathe about April 15, because all taxpayers are paying more than they would otherwise have to in order to make up for the lost revenue from pirates and counterfeiters.

So Long, Farewell…

This week Secretary of Health and Human Services (HHS) Kathleen Sebelius resigned her position from the Department of Health and Human Services.  Most policy people in Washington are not asking, “why?” but instead are pondering “what took so long?”  Sebelius has been secretary at HHS since the Affordable Care Act (ObamaCare) was written, passed by Congress, and signed into law.  Her job was to implement ObamaCare.

On November 6, 2013, about a month after the disastrous healthcare reform roll-out, vulnerable Senate Democrats up for election in 2014 went to the White House to meet with President Obama.  By all news accounts, the president heard an earful from the Senators about ObamaCare and its “train wreck“ roll out.  A week later, the Capitol Hill newspaper The Hill reported that, “furious congressional Democrats … expressed exasperation with the White House for its bumbling implementation of ObamaCare.”  On February 7, 2014, House Democrats went to the White House again to complain.  Rep. Carol Shea-Porter (D-N.H.) declared that some people should be offering their resignations because of the fiasco.

For the past six months, pressure has been building for Secretary Sebelius to resign.  Certainly recent data from an AP-GfK poll showing ominous signs for the Democrats in the 2014 elections helped to finally push Sebelius out from behind her desk at HHS.  Perhaps at-risk Democrats think the resignation will allow them to claim the Obama administration and their party are serious about fixing ObamaCare.

But there is no fixing of ObamaCare.  Majority Leader Eric Cantor (R-Va.) said it pretty succinctly soon after Sebelius’s announcement in a tweet stating, “I thank Secretary Sebelius for her service.  She had an impossible task: nobody can make Obamacare work.”

There may be another reason she was forced to leave at this time.  While the administration can claim victory for a couple of weeks that it reached its goal of 7.1 million sign-ups for ObamaCare, more precise enrollment numbers will soon be released.  If the enrollment numbers are not good, and many health policy wonks suspect that is the case, axing Sebelius may provide the scapegoat Democrats think they need.

Americans can expect some real data to come from the House Energy and Commerce Committee any day now. This committee, among other House committees, has repeatedly asked Sebelius for specific enrollment numbers such as how many people have paid their premium, how many were previously insured and uninsured, and what are the ages of the enrollees.  The secretary has repeatedly said she did not know the answer in testimony before the House committee.  As mentioned in my blog last week, it has long been suspected the secretary, or at least someone at HHS knew what the numbers were because according to news reports, the insurance companies were giving the agency the information.

Out of frustration, the Energy and Commerce committee asked insurance companies that are participating in the federal ObamaCare exchanges for the answers to their questions.  While the deadline for the data was April 1, no doubt updates will be forthcoming because of the surge of people signing up for insurance the last few days of March.

Why does it matter what the enrollment numbers are?  It will demonstrate how successful ObamaCare has been in getting the supposed previously 50.7 million uninsured Americans insured.  If most of those that have found insurance through an ObamaCare exchange were previously insured and lost their policy because of the law’s mandates, then that would be a colossal disaster.

Having at least 40 percent of the enrollees to be the “young invincibles” is important to keep ObamaCare actuarially sound.  This category is comprised of people between the ages of 18 and 34 that tend to be healthy and low consumers of health services.  ObamaCare needs their premium dollars to pay for the older and sicker enrollees that will use a lot of healthcare.  But recent data shows the young invincible are not enrolling.  As of March 1, the figure was at about 25 percent.  It is clear they know a bad deal when they see one.

While the administration likes to tout that 7.1 million have “signed–up,” for ObamaCare, until the first month’s premium is paid, the figure means nothing.  Only paid premiums will determine whether someone is covered or not.  An even more important number to track is how many continue to pay for their premium.  After all, previously uninsured individuals may feel some obligation to pay their first premiums but if the monthly costs start to eat into their budgets and they know they have to pay thousands of additional dollars before insurance kicks in, they may decide it is cheaper to pay the fine.

The president has already found a replacement for Sebelius and that is current Office of Management and Budget Director (OMB) Sylvia Mathews Burwell.  What kind of leader will she be?  Perhaps her appearance before the Senate Budget Committee on March 5, 2014 may give a clue.  CAGW and other budget hawk groups remember her refusal to admit that the president’s 2015 budget would spend $56 billion more than the spending caps allowed in the Bipartisan Budget Act signed into law on December 26, 2013.  Expect similar obfuscation when it comes to getting answers about ObamaCare.

Many news reports have declared the Burwell will have an easy confirmation process before the Senate since she was already confirmed as OMB director by a vote of 96 to 0.  But Michael Cannon of the CATO Institute points out in his recent blog that may not be the case.  She will be the first Secretary to oversee the Independent Payment Advisory Board, better known as IPAB, a product of ObamaCare.

Starting in 2014, this presidentially appointed, 15-member board will have power to make decisions on how to reduce Medicare spending if it should rise above a targeted growth rate, not an improbability considering the rate that baby boomers are retiring.  To do this, the board will decide how much providers will be paid within Medicare.  In the past, the power to make changes to Medicare’s payment rates required Congress to act.  But IPAB now has the authority to make the changes and Congress can only stop their decision by either coming up with another plan that cuts the same amount or overrule the board through a super majority vote.

While the law specifically states the board cannot “ration” care that is a distinction without a difference; if a physician must reduce the number of Medicare patients he or she treats because of reduced rates, seniors by default will have their care rationed.

Cannon notes the president has not appointed anyone yet to IPAB and if he chooses not to, then all IPAB’s power will fall to one person and that would be Ms. Burwell.

Also discussed in my blog last week was a soon-to-be-released Rand Survey Research Group study, which was hyped as great news in the L.A. Times because it proved that ObamaCare had led to coverage for millions of Americans.  The study was finally released on Tuesday, April 8.  While the survey found that 9.3 million gained health insurance from mid-September 2013 to mid-March 2014, most of the people surveyed found coverage through their employer or Medicaid.  Some 3.9 million gained coverage through an ObamaCare exchange with only 1.4 million being previously uninsured.

In conversations with many policy wonks in the free-market healthcare policy arena, I found a lot of skepticism for RAND’s study results.  In a nut shell, some say it is too small of a survey (2,425 individuals); has too large of a margin of error (3.5 million); believe that surveying the same people over a period of time will not be representative of the population as a whole; question the spike in employer insurance; and, believe it was hastily done.

Avik Roy writing in Forbes Magazine gives a good overview of the RAND study and says, “it’ll be interesting to see if others can replicate the finding that Obamacare is increasing the number of people with employer-sponsored insurance.  If they can’t, then we’re left with underwhelming enrollment figures on the exchanges.  Given all the media noise around the allegedly magical 7.1 million exchange sign-up figure, it’s worth pausing to note that it’s not at all clear how successful the exchanges have been at attracting the uninsured.”

Within the next few months, more studies and surveys will be taken and Americans will get a true measure of how well ObamaCare is working.

Times Have Changed

Once there was a time when 30-page college papers were typed on portable electric typewriters, research was done in library stacks, and job applications were filled out by hand.  Taxes were filed on paper and mailed (postmarked no later than April 15th) at the local post office, and shopping meant going to the local market and buying what was available at the store.  How times have changed.

The Internet has become a driving force in our economy, as Americans increasingly use services provided online to perform research, shopping, and education.  Not only are they using computers to perform these tasks, they are using wireless devices such as Smartphones, tablets, and laptops to access the Internet anytime and anywhere.  Tax returns and job applications are now submitted online, and an increasing number of schools insist their students use the Internet to perform research, take tests, and email their homework to their teachers.

The Internet has become a major factor in the economy, bolstered in 1998, when Congress placed a moratorium or ban on multiple and discriminatory taxes as well taxes on Internet access.  As noted in CAGW’s recent report, Telecom Unplugged:  Ushering in a New Digital Era, this moratorium, known as the Internet Tax Freedom Act was extended three times in 2001, 2004, and again in 2008.  The most recent extension expires on November 1, 2014.

As the expiration of the current moratorium closes in, it is time to extend the moratorium permanently.  On April 10, 2014, the Council for Citizens Against Government Waste was among a group of diverse organizations across the political spectrum to co-sign a letter to Congress expressing why passage of the Permanent Internet Tax Freedom Act (H.R. 3086) and the Internet Tax Freedom Forever Act (S. 1431) is critical to our nation.

It is unknown what future innovations will come about as use of the Internet expands, but one thing to consider, as noted in CAGW’s report, is that among the many problems with taxing the Internet is when something becomes more costly, people will engage in less of it.  Those using the Internet should not have to worry about whether they will need to pay additional new taxes for accessing the Internet for school work, shopping, emailing, or even to file their tax returns.  Yet, that is what they face should the moratorium be allowed to expire.

Not So Fast — How Many Have Paid? How Many Were Previously Insured?

ACA Total Blows Past 7 Million!” “Obamacare Comeback?” “More Than Seven Million Have Enrolled Under the Affordable Care Act, Whitehouse says!” blare numerous April 1, 2014 newspaper headlines.  The president gave a speech in the White House Rose Garden stating, “Last night, the first open-enrollment period under this law came to an end.  And despite several lost weeks out of the gate because of problems with the website, 7.1 million Americans have now signed up for private insurance plans through these marketplaces …7.1” and then declared that “the debate over repealing this law is over.  The Affordable Care Act is here to stay.”

With all the hoopla, high-fives, and fist bumps going on in “I love Obamacare land,” one would think that the previously 50.7 million uninsured Americans now have health insurance.   But even if the seven million-plus figure is an accurate portrayal of the newly insured, and one shouldn’t believe it is, then one could argue the healthcare reform law has not performed very well.  After all, 7 million is only 14 percent 50.7 million and a good chunk of the enrollees the president is touting about had insurance prior to Obamcare.  Let’s not forget, the main reason Obamacare was signed into law in the first place was to provide access to affordable health insurance coverage to millions of uninsured Americans who supposedly were clamoring for coverage.

One has to be circumspect when the administration states seven million have signed up for Obamacare.  What it means a person has entered an Obamacare online exchange and filled out an application form.  It does not mean all seven million have health insurance.

Before any definitive proclamations are made about Obamacare’s success, the first thing that needs to be discovered is how many people have paid for their first month’s premium.  Until that occurs, a person does not have health insurance.  The Obama administration has been asked for that figure several times but has stated it does not know the figure.  That is unlikely true because according to news reports the insurance companies have told them.

The second question that must be answered is who had health insurance in 2013, received noticed their policy was being cancelled because it did not meet Obamacare’s mandates, such as providing the ten essential benefits whether wanted or not, and had to scramble to purchase a new health policy.

Some results of a yet-to-be-released Rand Survey Research Group were shared with Noam  Levey, a reporter at the L.A. Times, who wrote about the findings and concluded about 9.5 previously uninsured Americans had gained coverage.  According to Levey, “Rand has been polling 3,300 Americans monthly about their insurance choices since last fall.  Researchers found that the share of adults ages 18 to 64 without health insurance has declined from 20.9% last fall to 16.6% as of March 22.”  Levey also reported that:

  • at least 6 million have signed up for coverage in the exchanges, of which one-third were previously uninsured;
  • that while a February McKinsey & Company survey found approximately 27 percent of new enrollees were previously uninsured, the Rand study suggests that amount had increased in March;
  • that 4.5 million people have signed up for Medicaid;
  • and that 3 million young adults have gained coverage on their parents’ health insurance plan; and
  • fewer than 1 million people that had insurance in 2013 are now uninsured.

Avik Roy at Forbes Apothecary disputes some of the L.A. Times’s conclusions.  Roy notes that in the aforementioned McKinsey survey, it was found that of those who had enrolled in an exchange and had been previously uninsured, only 53 percent had paid for their premium.  However, those that had prior coverage, lost it and enrolled in the exchange, 86 percent had paid for their premium.  Using that data, Roy believes that only about one-fourth of the Rand numbers were previously uninsured.

Roy also points out that the Congressional Budget Office had predicted that nearly all of the enrollees in the Obamacare exchanges would be the previously uninsured.  Based on the numbers gleaned from the various surveys this certainly is not the case.

The bottom line is researchers and policy wonks will have to wait for the Rand study to be officially released so its methodology and data can be analyzed before any conclusion are made about the newly insured under Obamacare.

In his blog, “A Slacking Figure” in the American Spectator, David Hogberg slams the claim that more than 3 million young adults have gotten coverage under their parents’ insurance plan.  He says the 3.1 million figure comes from a June 2012 Department of Health and Human Services report and is based on a faulty analysis.  More important, the administration hasn’t updated the report.  Hogberg thinks he knows why the administration hasn’t revised the claim in over 21 months.  Using more recent data, Hogberg calculated the number of insured young adults has fallen by 2.1 percent, or approximately 600,000.  That means the number of young adults on their parents’ plan is at about 2.2 million, not 3.1 million.

On Wednesday, April 2, the National Journal reported that Blue Cross Blue Shield Association says 15 to 20 percent of their potential enrollees are not paying their first months’ premiums.  The “Blues” are a big player in the Obamcare market and extrapolating that number means the real enrollment number would fall from 7.1 million to approximately 5.7 to 6 million.  I am not going to take too much of a leap and bet the vast majority of the non-payers were previously uninsured.

Soon pre-Obamacare Medicaid and Medicaid expansion enrollment numbers will be forthcoming from the states.  Medicaid provides coverage to children, pregnant women, parents, seniors and individuals with disabilities and is a shared social welfare program between the federal government and the states.  Obamacare allowed states to expand the Medicaid program for all low-income Americans up to 138 percent of the federal poverty level.  If a state chooses to expand Medicaid, and 26 states and the District of Columbia have done so, the federal government will pay 100 percent for the expansion enrollment numbers until 2016, gradually dropping the reimbursement rate to 90 percent in 2020 and beyond.  Pre-Obamacare Medicaid enrollment numbers will receive anywhere from the statutory limit of a 50 percent to 83 percent reimbursement from the federal government.  As these numbers are calculated, it will be easy to decipher how many people are in regular Medicaid and how many joined via Medicaid expansion.

Interestingly, it is expected even the states that did not expand Medicaid will see growth in the program at an average of five percent.  For example, South Carolina is expecting a 16 percent jump by 2015.  All of the news about Obamacare and the requirement to getting health insurance has raised the awareness of the Medicaid program.  People who always were eligible to be in Medicaid are apparently now signing up for the government-run program for the first time.

This is not a good thing for the states or the patients.  CAGW has written before about how Medicaid does not provide good healthcare.  Many doctors refuse to take Medicaid patients because of its bureaucratic morass and low reimbursement rates. Currently, the program consumes about 25 percent of most states’ budgets and its growing.

The organizations that have the numbers on what is happening with respect to Obamacare enrollment are the insurers.  On March 13, 2014, the House Energy and Commerce Committee sent a letter to every insurer that is participating in the federal Obamacare exchange to provide enrollment data such as whether or not the enrollees were previously insured, their ages, and if they have paid their premium.  CAGW has been told these figures are being provided and will eventually be released.

Another figure that needs to be monitored during the year is how many people continue to pay their premium.   Many of the Obamacare plans, especially in the Bronze category, have large deductibles of about $6000 and out-of-pocket costs that must be paid before the insurance kicks in.  It is very likely that many individuals, especially those that did not have healthcare insurance prior to January 1, 2014, and are either receiving a small subsidy or none at all, may decide the monthly premium is not worth the cost.

The Obama administration has not wanted to talk about the real enrollment numbers but eventually the numbers will be known.  The American people will then decide if Obamacare was worth the headaches and huge cost.  The debate is far from over.

Happy Birthday for Obamacare?

On March 23, 2010, President Obama signed the Patient Protection and Affordable Care Act (Obamacare) into law.  The healthcare reform law is also known as the Affordable Care Act.  President Obama and Vice President Biden gave brief remarks during the signing ceremony.  Below are some of the statements and promises made by the president to the American people on that day.  My comments immediately follow the remarks.

  • President Obama: “It will take four years to implement fully many of these reforms, because we need to implement them responsibly.  We need to get this right.  But a host of desperately needed reforms will take effect right away.”
    • It’s true that the administration had four years to implement the law and they still did not get it right.  We saw the disastrous results on October 1, 2013 when the online federal health exchange, Healthcare.gov, crashed immediately, leaving citizens unable to enroll on both the federal and state exchanges.  While many of the problems that consumers experienced have been fixed, several problems still remain such as the government sending data to insurers and the states. There were also problems with several state-run exchanges that are continuing today.  Interestingly, some of the states that have experienced the most problems are ones that enthusiastically embraced Obamacare.  Cover Oregon has not operated correctly since October 2013.  Maryland Health Connection has performed badly from the start and is still not working efficiently.  The Massachusetts Health Connector, ironically the healthcare exchange from which the federal healthcare reform law was modeled, has had great difficulty transferring over to Obamacare’s requirements.  How much money have these states received from the federal government to design their failed online exchanges? The federal taxpayer has provided $303 million to Oregon, $171 million to Maryland, and $180 million to Massachusetts.  Since most of the uninsured are young and healthy, imagine if that money had been used instead to provide them financial assistance to purchase health insurance in the private market, perhaps partially funding a health savings account (HSA) and the premium for a catastrophic plan?
    • We later learned in a series of Congressional hearings that 40 percent of the website had not been built by October 1.  We learned the administration had been warned in March 2013 that there were problems with the website but did nothing to fix it because for whatever reason, no one in the administration seemed to be in charge to make sure the website worked end to end.  We have learned that when an official from the Department of Health and Human Services says someone has signed up, selected or enrolled in an exchange, it does not mean the person has paid their first month’s premium, the only true metric that the consumer has health insurance.  And while the administration claims the website is “working great” that is not the case.  There are thousands of erroneous entries that must be fixed manually and insurers still cannot get the premium support payments (the Obamacare subsidies) from the government.  While the administration claims approximately 4.2 million have enrolled (please re-read sentence above), we do not know how many were uninsured prior to October 1, 2013 or are replacing a health insurance plan they had but was discontinued because it did not meet Obamacare’s expensive mandates.  Based on surveys it is believed only 11 percent to 27 percent of total enrollees in Obamacare were previously uninsured.  We also do not know how many have paid their premium.  To get more factual information, the House Committee on Energy and Commerce has asked insurers to gather this information.
  • President Obama: “This year, we’ll start offering tax credits to about 4 million small businessmen and women to help them cover the cost of insurance for their employees.  That happens this year.”
    • Well, maybe not.  The National Federation of Independent Business (NFIB), which represents more than 350,000 small businesses, stated in April 2010 that the IRS tax credit would have limited impact on helping small businesses because the availability of the credit is too short and too restricted.  The tax credit between 2010 and 2013 was 35 percent for an employer’s healthcare costs.  Starting this year the credit is increased up to 50 percent if the employer purchases a plan for his employees through the Small Business Health Options Program (SHOP) for the next two years and pays 50 percent of the insurance cost to qualify for the credit.  The credit amount changes depending on the number of employees the employer has and their salaries.  But the incentive lasts only two years, then it is dropped. Since employers with less than 50 employees are not required to provide insurance, it is unlikely many will participate in the tax credit scheme.  After all, why would businesses start something that will assuredly cost them a great deal more in a few years and perhaps become unaffordable.  To do so would put employers in a dubious situation where they may have to stop providing health insurance to their employees or layoff employees to meet payroll.  The Government Accountability Office (GAO) seems to back up NFIB’s prediction.  In May 2012, the GAO reported in a study that only 170,300 businesses of a possible 4 million took advantage of the credit.
    • As for the SHOP provision and the employer mandate, the NFIB wrote a critical letter to Health and Human Services (HHS) Secretary Kathleen Sebelius of three significant changes the agency made to the law within a period of two weeks in November, 2013.  They are: the employer mandate delayed by one year; the comment period for the proposed rule on how the tax credit to small employers for purchasing health insurance will be implemented was closed; and instituted a one-year delay for online enrollment in the SHOPs.  These delays and changes simply added to businesses’ confusion with Obamacare.
  • President Obama: “This year, tens of thousands of uninsured Americans with preexisting conditions, the parents of children who have a preexisting condition, will finally be able to purchase the coverage they need.  That happens this year.”
    • The president is talking about the two issues in this case.  While it is true the law made it so that insurers could not deny or restrict coverage to children under the age of 18 with pre-existing conditions, it’s unlikely that a large number of uninsured children existed in the first place.  While the president claimed 17 million children will no longer be denied access to health insurance for a pre-existing condition, Politifact.com undertook an analysis and believe the actual number was between 160,000 to 1.1 million.  Politifact.com argued that access to Medicaid or the State Children’s Health Insurance Program provided care to numerous children before Obamacare.
    • The law also created a temporary risk pool from 2010-2014 for people with pre-existing conditions.  In spite of the administration’s claim that 25 percent of adults, or 65 million people suffered from a pre-existing condition, only about 78,000 signed up to participate in the risk pool by June 30, 2012.  In mid-December, about 85,000 were participating in the high risk pool.  The reality is the number of people who had no access to health insurance because of a pre-existing condition was much lower than 65 million.  Paul Roderick Gregory wrote on Oct 8, 2013 in Forbes that the number was closer to 1.5 million.  He said if the government had given each uninsurable person a $10,000 subsidy it would have been one-tenth the cost projected for Obamacare.
  • President Obama: “This year, insurance companies will no longer be able to drop people’s coverage when they get sick.  They won’t be able to place lifetime limits or restrictive annual limits on the amount of care they can receive.
    • The Health Insurance Portability and Accountability Act of 1996 (HIPAA) had already provided these kinds of protections for millions of people and their health policies.  But as Tom Miller of the American Enterprise Institute and James Cappretta of the Ethics and Public Policy Center pointed out in a November 2009 article in National Review that while HIPAA worked pretty well, those in the individual market often fell through the cracks.  Instead of a trillion dollar takeover of the healthcare sector, the authors called for targeted changes to HIPAA such as allowing people to move from job-based plans into the individual market without being penalized and not allowing insurers to increase premiums to more than 1.5 times the standard rate.
    • As for lifetime limits or restrictive annual limits, this another case where a regulation is driving up the cost of health insurance for everyone and limits choice for consumers.
  • President Obama: “This year, all new insurance plans will be required to offer free preventive care.  And this year, young adults will be able to stay on their parents’ policies until they’re 26 years old.  That happens this year.”
    • Nothing is free.  Someone has to pay the providers that give the “free” service.  The pay-for is embedded in increased premiums, higher deductibles, and narrower networks now being experienced by millions of Americans.
    • There is no doubt the provision to allow young adults to remain on their parents’ health plan until they are 26 is very popular. But most parents would probably prefer that their “child” had a full-time job and that they could afford their own health insurance.  It is another sign of a stagnant, weak economy and a further Europeanization of America.
  • President Obama: “And this year, seniors who fall in the coverage gap known as the doughnut hole will start getting some help.  They’ll receive $250 to help pay for prescriptions, and that will, over time, fill in the doughnut hole.  And I want seniors to know, despite what some have said, these reforms will not cut your guaranteed benefits.  In fact, under this law, Americans on Medicare will receive free preventive care without co-payments or deductibles.  That begins this year.”
    • Medicare cuts were a discussion topic in the 2012 election and have reappeared this year due to some decisions made by the Obama administration.  Avik Roy discussed the cuts to Medicare in an October 2012 Forbes article.  For example, money is being shifted to help pay for the tax subsidies for younger people who enroll in Obamacare and it is used to beef-up the Medicare Part D benefit by slowly closing the “donut hole,” or coverage gap, which only affects approximately 6 percent of the senior population.  The reduction in Medicare is also used to provide “free” preventative care for seniors.  Roy says, “according to the Congressional Budget Office, for every $500 the law spends on preventive services and prescription drugs, it cuts the rest of Medicare by $7,385. That’s a cut-to-spending ratio of nearly 15 to 1.” Of course, cutting payments to providers can make it difficult for them to serve their patients. That is why many doctors limit the amount of Medicare patients they see; their practice would not survive otherwise.  If seniors have difficulty accessing care, that is a form of a benefit cut.
    •  More than $200 billion will be cut from the Medicare Advantage (MA) program, the managed-care version of Medicare.  About 28 percent of seniors utilize MA as opposed to the traditional fee-for-service Medicare.  While Congress has expressed angst about the cuts, the reductions are authorized in Obamacare.  Sally Pipes of the Pacific Research Institute said in an April 2013 Forbes article that billions will be slashed from MA over the next ten years and that it will cause seniors to leave the program.  Pipes says this was always the goal of Obamacare’s authors because MA “relies on private insurers to deliver health benefits” and “it’s never been popular with lawmakers who would prefer that the government exert total control over seniors’ health care.”  She said MA provides more services than traditional fee-for-service Medicare, such as dental and vision care.  According to Pipes, a study “recently found that Medicare Advantage programs can provide the same level of benefits as conventional Medicare for 13 percent less.”
  • President Obama: “This legislation will also lower costs for families and for businesses and for the federal government, reducing our deficit by over $1 trillion in the next two decades.  It is paid for.  It is fiscally responsible.  And it will help lift a decades-long drag on our economy.  That’s part of what all of you together worked on and made happen.”
    • The most recent Congressional Budget Office score for Obamacare is $1.5 trillion over ten years.  This is almost double the price tag of $848 billion over ten years that Obamacare was suppose to cost.  Plus, the Centers for Medicare and Medicaid Services (CMS) recently announced it might extend Obamacare’s “risk corridors,” a mechanism that requires taxpayers to bail out insurance companies if they lose too much money in the exchanges.  If implemented, this will certainly drive up Obamacare’s costs even further.  Unfortunately, this is a likely scenario as it appears too many sick people and not enough healthy, young people are participating in the exchanges.  A possible result if this trend continues is the “death spiral” of the exchanges.
    • As for a drag on our economy, Obamacare certainly is not helping.  The nation is experiencing one of the weakest recoveries in the last 50 years.
    • All indications are that healthcare costs will increase, not fall, for most businesses and families.

And of course, President Obama promised Americans could keep their healthcare plan if they liked it – period.  We were told we could keep our doctor too and that insurance premiums would go down in price by an average of $2500 a year.  Just the opposite has happened.

Several parts of Obamacare have been delayed such as the employer mandate; allowing non-compliant Obamacare health insurance plans to continue for an additional two years, conveniently allowing them to survive past the 2014 elections; and exempting unions from the re-insurance fee or tax to name just a few.  The Galen Institute has a list of 37 changes to Obamacare, many of them implemented illegally.  One may ask, if Obamacare is so great, why are so many major changes being made without Congressional approval?  The answer is the problems with Obamacare never were just the website; the problems have always been with the law’s policies and design.  We are now seeing these problems come to fruition.

According to recent polling data, a majority of Americans disapprove of Obamacare and as time goes on, this number will likely grow.  Already, a special election for a Congressional seat was fought over Obamacare and the proponent for the law lost.  Will this same result carry into the November congressional elections?  That is the calculus that is going on inside the political parties today.

Obamacare’s fourth birthday is a day few celebrated.

Murkowski’s Folly

The first rule of communications is getting the message right.

A March 11, 2014 op-ed by former Secretary of the Interior Bruce Babbitt appearing in the Los Angeles Times provided a unique glimpse into how messaging used by politicians can shift over time.  The editorial detailed the push in the 1990s by former Alaska Senators Frank Murkowski and Ted Stevens to build a 38-mile road connecting King Cove with the neighboring town of Cold Bay.  Opposed by the Clinton Administration, the idea was to expedite the movement of seafood from the salmon canneries in King Cove to the airport in Cold Bay for distribution.

Twenty years later Sen. Lisa Murkowski (R-Alaska) has taken up her father’s mantle, while subtly altering his message.  The justification for the road is no longer to boost the local economy, but rather an effort to ensure safety.  Similar to many small communities in Alaska, King Cove is not accessible by road, relying upon transportation via plane or boat.

In February of 2013, Sen. Murkowski threatened to block the nomination of Interior Secretary Sally Jewell unless the road was approved.  That attempt ultimately failed, and in December of 2013, Secretary Jewell formally rejected the project because it would run through the Izembek National Wildlife Refuge.  This “Road to Nowhere,” which has also drawn support from Sen. Mark Begich (D-Alaska) and Rep. Don Young (R-Alaska) would have cost federal taxpayers an estimated $75 million, or $79,113 per King Cove resident.

Undeterred, Sen. Murkowski is now pressuring the Obama Administration to overturn the decision.  Citing the Izembek road, she announced her opposition in February 2014 to Rhea Suh as the administration’s nominee for Assistant Secretary for Fish and Wildlife and Parks.  Sen. Murkowski also submitted a response to Secretary Babbitt’s op-ed on March 14, 2014.

Regardless of Sen. Murkowski’s altered pretext, it remains clear that commercial interests, not medical emergencies, are the primary driver of the project.  According to a February 24, 2013 Washington Post article, “Originally, both area residents and state officials viewed the road as a way to bolster the region’s fishing industry…when King Cove passed its first resolution calling for its construction, it did not mention safety concerns and instead called for the road to ‘link together two communities having one of the state’s premier fishing port/harbors.’”  The safety rationalization emerged only after it appeared unlikely that the Izembek road would receive federal funds.

In his op-ed, Secretary Babbitt concurred, claiming that Sen. Murkowski’s true motive is purely parochial:

But despite pledges and promises to the contrary, the real purpose for building the road is the same as it ever was: moving fish and workers to and from King Cove’s canneries.  Today, Peter Pan Seafoods, wholly owned by the Japanese company Maruha Capital Investments Inc., is the largest cannery in King Cove.  A local assemblyman acknowledged in 2010 that the road would help Peter Pan better transport “fresh product.”  And the local borough has been clear about its ambition to ship “live crab directly from the Aleutians East Borough ‘hub’ port of Cold Bay to markets in China and other Asian countries.

The argument that the road will be safer than current methods of transportation from King Cove is also dubious.  The February 24, 2013 Post article quoted former Eastern Aleutian medical director for the Public Health Service Peter Mjos, who stated emphatically, “Combined with darkness, avalanche conditions, and ice-glazed roads, an attempt to travel the proposed road would be foolish beyond any reason, regardless the emergency or business.  Any attempt to maintain the road for travel in such conditions would clearly jeopardize life.”

Further, the federal government has already attempted to address the safety issue, providing $37.5 million in 1998 for a hovercraft and port terminals, a road to the hovercraft terminal, and an upgraded telemedicine facility.  This agreement, reached between the Clinton Administration and Alaska’s senators, was to exist in lieu of the Izembek road.  The medevacs performed by the hovercraft worked so well that the borough’s mayor called it a “lifesaving machine” in 2008.  After three years, the borough decided to use the hovercraft to provide transportation for workers at an alternate seafood plant.

The proposed road is so onerous that it has achieved the near-impossible in 2014: consensus between our political parties.  On March 14, 2014, a bipartisan group of former Interior Department officials supported Secretary Jewell’s rejection of the project.  In a letter to the Secretary, the group, consisting of assistant secretaries from the George W. Bush, Clinton, Ford, and Nixon administrations stated, “Put bluntly, the Izembek road was a terrible idea in 1998, it was a terrible idea when you heroically rejected it last December, and it still remains a terrible idea today.”

Any consumer can tell you that while communication strategies change over time, products usually remain the same.  Such is the case with the Murkowski family road, where the justification has shifted from the local economy to local safety.  It does not take a particularly discerning eye to deem the Izembek road unworthy of funding.

Obama of the Thousand Days

Yes, it’s happened again, twice in a matter of days.  The Obama administration has made major changes to Obamacare or the Affordable Care Act (ACA) without Congressional approval.  Based on a Galen Institute list of administrative changes to ACA, the first change occurred on April 19, 2011 when a Medicare Advantage “patch” was created to forestall cuts in benefits, which would have occurred just before the 2012 elections.  It’s now been 1,058 days since the Obama administration unilaterally has changed the healthcare reform law without any consequences from Congress.  The “Imperial Presidency” appears to be alive and well.

Here’s the background.  The botched Healthcare.gov roll-out and several malfunctioning state-run exchanges prevented untold numbers of people signing up for ObamaCare and thus getting access to the premium tax credits and cost-sharing subsidies based on income.  By law, the subsidies are only available to individuals or families with household incomes between 100 – 400 percent of the federal poverty level and only through a state-run exchange.* Many people gave up trying to enroll before the end of the year while others decided to purchase health insurance outside the exchanges, undoubtedly knowing doing so would prevent them getting access to the subsidies but wanted the coverage immediately.

But the Centers for Medicare and Medicaid Services (CMS) came to the rescue and issued guidance late Thursday, February 27, 2014, to the state exchanges that it would provide premium tax credits and cost-sharing reductions on a retroactive basis not only for individuals that currently do not have health insurance but even to individuals that have Obamacare compliant insurance outside of the exchange if they have now been found to be eligible for the subsidies.  Here is what CMS said in its background statement:

This guidance is being provided to Marketplaces that, due to technical issues in establishing automated eligibility and enrollment functionality, have had difficulty in providing timely eligibility determinations to applicants and enrolling qualified individuals in Qualified Health Plans (QHPs) through the Marketplace during the initial open enrollment period for the 2014 coverage year. Such a circumstance may be considered an exceptional circumstance for individuals who were unable to enroll in a QHP through the Marketplace due to these issues. In this guidance, we discuss the availability of advance payments of the premium tax credit (APTC) and advance payments of cost-sharing reductions (CSRs) on a retroactive basis to an issuer once the Marketplace has provided a qualified individual with an appropriate eligibility determination and has determined that the individual is eligible for such assistance and the individual has enrolled in a QHP through the Marketplace. We also clarify the attendant responsibilities of the QHP issuer in this circumstance.

Viola! CMS will allow people who are currently not enrolled in health insurance coverage since January 1, 2014 but have since received notification they are qualified to receive a taxpayer-funded subsidy will be able to get it retroactively when they do enroll.  Going one step further, CMS declares “if an individual in the exceptional circumstance described above is enrolled in QHP coverage offered outside of the Marketplace, when he or she receives a determination of eligibility for coverage through the Marketplace, the Marketplace may deem the individual to have been enrolled in the QHP through the Marketplace retroactive to the date on which the individual first enrolled in the QHP outside of the Marketplace. In that case, the individual will be treated for all purposes as having been enrolled through the Marketplace since the initial enrollment date.”

This is clearly a violation of the law.  Here is what the IRS announced on February 25, just three days before CMS’s announcement:

The Premium Tax Credit

IRS Health Care Tax Tip 2014-03, February 25, 2014

The premium tax credit can help make purchasing health insurance coverage more affordable for people with moderate incomes. To be eligible for the credit, you generally need to satisfy three rules.

First, you need to get your health insurance coverage through the Health Insurance Marketplace [emphasis added.] The open enrollment period to purchase health insurance coverage for 2014 through the Health Insurance Marketplace runs from October 1, 2013 through March 31, 2014.

Second, you need to have household income between one and four times the federal poverty line. For a family of four for tax year 2014, that means income from $23,550 to $94,200.

Third, you can’t be eligible for other coverage, such as Medicare, Medicaid, or sufficiently generous employer-sponsored coverage

Time Magazine’s “Swampland” wrote this on October 30, 2013, “The ACA subsidies are technically tax credits, but consumers can’t apply for them later when they file their income tax returns. The subsidies are only available when consumers purchase coverage through the exchanges, according to CMS. ‘As far as retroactive premium tax credits for a plan outside the exchange, you can’t do that under the statute,’ says Timothy S. Jost, a professor at Washington and Lee University and an expert on provisions of the new law.”

CMS leaves the financing of this new decision to the insurers to handle. In both instances mentioned above, CMS tells insurers to refund or credit any enrollee any excess cost sharing or premium paid that was accrued during the retroactive period.  CMS only gives the insurers 45 calendar days from the “date of discovery of the excess cost-sharing or premium paid” to accomplish this task.  Meanwhile CMS can continue to change that law at whim and expect everyone else to comply immediately.

But what, there’s more! On March 5, CMS issued guidance that will allow Obamacare non-compliant plans to be renewed for two more years, until October 2016, conveniently by-passing the mid-term elections scheduled for November 2014.  If renewed by October 2016, a person is purchasing coverage into 2017, thus getting them by the presidential election as well.  Of course the plans being renewed are the “substandard,” “junk” plans that are created by those “bad apple” insurers.

Philip Kline in the Washington Examiner reports, “A supposedly temporary ‘fix’ that President Obama announced in November to address the problem of the millions of Americans who lost coverage as a result of his health care law has now been extended through Oct. 1, 2016… In an attempt to limit the disruption to the insurance industry that would be caused by the move, HHS also announced that the “risk corridor” program (which has been described as a “bailout” to insurers) would be further modified to funnel more money to insurers in states affected by the change.  The move, which the Hill reported on earlier this week, comes as vulnerable Democrats are struggling to defend their support for Obamacare in a midterm election year.”

Kline also discusses a bigger problem:

Looking at the issue more broadly, the change undermines a central rationale for Obama’s health care law.

Obama and his allies long-defended the outlawing of certain health care plans, arguing that they were substandard. And they argued that depriving people of the ability to purchase such plans was essential to making the health care law work. If young and healthy people can purchase cheap health insurance with fewer benefits, they argue, it would make coverage more expensive for older and sicker Americans.

Now, not only is Obama saying that these legacy plans can remain, but he’s saying they can stay alive for three years longer than intended. If they can be extended for three years, the new rules may never fully go into effect (unless Obama will allow a wave of cancellations in October 2016, just before the presidential election).  And maintaining these plans will further drive up the cost of insurance on the exchanges.

It’s hard to see how this two-tiered health care system can sustain itself. Obama is saying that some individuals get to keep their old, cheaper and better health insurance plans. But other individuals are forced into an increasingly expensive insurance market.

CMS said when they issued the guidance, “As part of ongoing efforts to implement the Affordable Care Act, HHS has heard from families, states, businesses, health professionals, Congress, insurance commissioners, and insurers who want certainty on what’s coming as early as possible so that they can plan ahead.  The policies being announced today are another step in our ongoing efforts to bring millions of Americans access to affordable coverage.”

But this guidance will not grant certainty.  The guidance provides “insurers the option, if permitted by their state, to renew their current policies for current enrollees without adopting all of the 2014 market rule changes.”  The problem is the ruling is just guidance, not what is written in the law.  That places insurers at risk.  Plus, if the state doesn’t allow plans to be renewed or the insurer feels it cannot renew a non-compliant Obamacare policy, it will be they who get blamed for dumped policies, not the Obama administration for their incompetence.

It is ultimately the policy that is awry, not the malfunctioning websites that will lead to Obamacare’s demise.  Already news reports of surveys are trickling out that demonstrate the formally uninsured are not the ones enrolling in Obamacare, the main purpose of the law.

Sooner or later the piper must and will be paid for this failing healthcare “reform” law.

 

* It should be noted that an ongoing controversy is winding its way through the courts.  The concern is whether citizens that purchase an Obamacare health plan through the federally-run exchanges, now operating in 27 states, are entitled to taxpayer subsidies to help pay for premiums and co-pays.  Opponents of Obamacare believe the law only allows subsidies to be distributed through a state-run exchange but the IRS has determined otherwise.  If the courts should ultimately rule that the opponents are correct, most of Obamacare would collapse.

The law says, in Section 1401, that premium support may be “offered in the individual market within a State which cover the taxpayer, the taxpayer’s spouse, or any dependent (as defined in section 152) of the taxpayer and which were enrolled in through an Exchange established by the State under 1311 of the Patient Protection and Affordable Care Act…”

A great synopsis of the issue is written by Allahpundit in Hot Air in which he gives a run-down on a recent court decision in Halbig v. Sebelius, one of the cases winding through the courts.  This case has recently been appealed.  Allahpundit also notes Jonathan Adler’s piece from December 2012 in The Volokh Conspiracy.  Adler, who penned an Amicus Brief along with Michael Cannon of the CATO Institute, for Halbig v. Sebelius, explains that Congress wanted the states to develop and run the exchanges, not the federal government, and provided tax credits toward the purchase of health plans as an incentive.  The credits are also a tool to keep the states operating the exchange the way the federal government wants them to be run.

One of these cases could end up in front of the Supreme Court.

STELA Takes Center Stage at Hearing

The House Energy and Commerce Subcommittee on Communications and Technology is slated to hold a hearing on the Satellite Television Extension and Localism Act of 2010 (STELA) on March 12, 2014.  This hearing opens a window of opportunity to discuss outdated regulatory schemes, such as retransmission consent agreements, and must-carry provisions of the Cable Act of 1992.

STELA reauthorized the Satellite Home Viewer Extension and Reauthorization Act of 2004, which governed the satellite carrier distant broadcast signal license and the retransmission of broadcast television content by satellite companies.  STELA also modernized and simplified licensing processes, while encouraging satellite providers to provide more local content to viewers.  In addition, the law revised and updated adjustments to the royalty percentages paid by cable companies to content providers under copyright laws.  The current STELA authorization expires on December 31, 2014.

In 1992, Congress enacted The Cable Act of 1992 to address cable television rate increases following deregulation and the concern of broadcasters that cable operators would not carry their local stations under the existing guidelines.  Much has changed in video viewing since the 1992 Act, and the law failed to take into consideration how quickly the television and video industry has grown and expanded, providing a competitive marketplace that provides consumers multiple choices in how they access video content.  Broadcasters no longer deal with a single cable monopoly; on the contrary, broadcasters choose among multiple providers ranging from cable to satellite to fiber optic networks.

On March 5, 2014, the Council for Citizens Against Government Waste (CCAGW) sent a letter to Members of the House Energy and Commerce Committee reiterating its support for reform of the rules governing the television marketplace.  CCAGW prefers a level playing field between multichannel video programming distributors (MVPDs) and broadcasters during negotiations by eliminating the sweeps week ban on an MVPD blocking signals to certain stations when a retransmission dispute occurs and the elimination of a broadcaster’s right to placement on the basic tier.

On March 6, 2014, Communications and Technology Subcommittee Chairman Greg Walden proposed draft legislation to reauthorize STELA for another five years.  In addition, the proposed legislation would impose limitations on joint retransmission consent negotiations which would permit cable and satellite companies to reach a deal with individual broadcasters for the right to carry their signals.  The proposed bill would also end a federal security equipment requirement for set-top boxes and provide for more equitable negotiations for programming compensation during the period when broadcasters collect ratings information.

Government rules and regulations should drive businesses into the twenty-first century, not hold them back.  The discussions over STELA reauthorization provides the opportunity to review and reform antiquated regulatory schemes, including retransmission consent, and provide a new regulatory structure that reflects the current competitive marketplace.

The ObamaCare Python

On February 12, 2014, the Obama Administration released the final regulation for the Affordable Care Act’s (ACA) employer-shared healthcare insurance responsibility provisions.  This regulation again delays the employer mandate and changes the healthcare reform law without Congressional approval.  But it also contains a provision, which truly demonstrates how pernicious ACA, better known as ObamaCare, is to employers and their ability to make decisions on how to run their company.  It demonstrates how powerful the federal government has become.

As you may recall, the healthcare reform law required all employers with 50 or more full-time equivalent employees to provide ObamaCare mandated insurance benefits or pay a fine starting January 1, 2014.  (Full-time work is now considered 30 hours per week.)  The fine can vary depending on whether the employer doesn’t provide insurance at all, provides insurance deemed having minimum value by ObamaCare (a plan that covers less than 60 percent of benefit costs) or if at least one employee receives a premium tax credit that helps pay for coverage in an ObamaCare exchange.  This can happen if the employer provides insurance ObamaCare has deemed too expensive (9.5 percent or more of the employee’s annual income) and the employee purchases insurance via an ObamaCare exchange to take advantage of the taxpayer-provided subsidies.  The employer will pay the government the lesser of $2000 for each employee that does not receive health insurance or $3000 for each employee receiving a premium credit.

The just-released regulation changes the date for complying with the mandate until 2015 or 2016 depending on the size of the employer.  Listed below are the three provisions concerning employer size and when the mandate takes affect:

Small Businesses with fewer than 50 employees (about 96% of all employers): Under the Affordable Care Act, companies that have fewer than 50 employees are not required to provide coverage or fill out any forms in 2015, or in any year, under the Affordable Care Act. [Note: This has always been the case within the law.]

Larger employers with 100 or more employees (about 2% of employers): The overwhelming majority of these companies with 100 or more employees already offer quality coverage.  Today’s rules phase in the percentage of full-time workers that employers need to offer coverage to from 70 percent in 2015 to 95 percent in 2016 and beyond.  Employers in this category that do not meet these standards will make an employer responsibility payment for 2015.

Employers with 50 to 99 employees (about 2% of employers): Companies with 50-99 employees that do not yet provide quality, affordable health insurance to their full-time workers will report on their workers and coverage in 2015, but have until 2016 before any employer responsibility payments could apply.

Because of the delay, the Obama Administration has created a transition period for employers.  During this transition time, employers are responsible for figuring out their total number of employees and the number of hours they work.  Depending on the number of employees the company has, the employer will not have to make responsibility payments until 2015 or 2016.

The cost of ObamaCare’s expensive mandates has employers worried and it’s doubtful this delay will elevate fears.  Last year there were dozens of news reports on numerous employers making the decision to make most, if not all, of their employees part-time, thus avoiding the ObamaCare mandate.  Other companies were changing their insurance policies to not include spouses; laying-off or not hiring workers; or eliminating health insurance coverage entirely.  Investor’s Business Daily has a “list of job actions with strong proof that ObamaCare’s employer mandate is behind cuts to work hours or staffing levels.”

One of the more insidious aspects that came out of the February 12 final regulation is a requirement that in order for employers with 50 to 99 employees to receive “transition relief” to comply with ObamaCare, they must certify under penalty of perjury to the federal government that they have not reduced their workforce force or eliminated or materially reduced health coverage if any insurance was offered as of Feb. 9, 2014.  This requirement can be found in IRS’s “Question and Answers on Employer Shared Responsibility Provisions Under the Affordable Care Act” document, question number 34.

Fox News, CNBC, Bloomberg News, and the Washington Times were a few of the news outlets that found the certification requirement newsworthy.  CNBC wrote that Obama Administration “officials said that any business claiming they are eligible for the new one-year delay because they have fewer than 100 workers must certify, under penalty of perjury, that it had not reduced its workforce merely to qualify for that exemption.”

Here is what Fox said:

Is the latest delay of ObamaCare regulations politically motivated?  Consider what administration officials announcing the new exemption for medium-sized employers had to say about firms that might fire workers to get under the threshold and avoid hugely expensive new requirements of the law.  Obama officials made clear in a press briefing that firms would not be allowed to lay off workers to get into the preferred class of those businesses with 50 to 99 employees.  How will the feds know what employers were thinking when hiring and firing?  Simple.  Firms will be required to certify to the IRS – under penalty of perjury – that ObamaCare was not a motivating factor in their staffing decisions.  To avoid ObamaCare costs you must swear that you are not trying to avoid ObamaCare costs.  You can duck the law, but only if you promise not to say so.

What could be some of the reasons for the certification?  There could be several according to several healthcare policy wonks.

It’s been predicted that millions of cancellations of health insurance policies in the small group and individual market will come to fruition throughout 2014 because they do not comply with ObamaCare’s pricy mandatory essential benefit package.  (For example, single men and menopausal women are required to have coverage for maternity and pediatric care.)  Many cancellations will occur in October, just a month before the 2014 mid-term elections.  Could the Obama Administration be trying to stem the flow of cancellations so soon before an election?

Some argue that even if businesses certify falsely that the changes they made to their workforce numbers or insurance coverage had nothing to do with the ObamaCare mandates in order to get transition relief, the IRS will not come after them.  What the administration really wants is to be able to do is hold up thousands of certifications just before the elections and declare any cancelled insurance policies or lay-offs were not due to ObamaCare’s mandates – the causes were for “bona fide business reasons.”

But others express concern that IRS officials could go after a few companies, based on what employees may report to them or what they see in the news and make examples of them, thus forcing other employers to not drop insurance coverage or lay-off workers just before the election.  After all, this is the administration in which an EPA official, Region VI Administrator Al Armendariz, said one way to keep oil and gas companies obedient is to do what the Romans did when they first entered a town.  He said the Romans would, “find the first five guys they saw and they’d crucify them…then, you know, that town was really easy to manage for the next few years…it’s a deterrent factor.”

To add more to the mix, Robert Laszewski, a health insurance specialist, said in his Health Care Policy and Marketplace Review blog that, “For employers with more than 50 workers this is a delay not a fix.  Employers will only now up the pressure to change the law completely, knowing they have the administration on the political run over these issues.  And, small employers will still have to comply with the very costly minimum benefit mandates — really the biggest complaint they have had.  Just exactly what is the Obama administration accomplishing with a delay?”

It’s hard to know exactly but what is known is thousands of employers have some tough decisions ahead of them and this is only the beginning on how to live with the ObamaCare python.