Is This the End of Obamacare’s Individual Mandate? Administration Continues to Test the Constitution
A recent rule change by the HHS may signal the beginning of the end of the controversial Individual Mandate. The Wall Street Journal reports
“That seven-page technical bulletin includes a paragraph and footnote that casually mention that a rule in a separate December 2013 bulletin would be extended for two more years, until 2016. Lo and behold, it turns out this second rule, which was supposed to last for only a year, allows Americans whose coverage was cancelled to opt out of the mandate altogether.”
It seems like the administration is ramping up its constitutionally dubious delays. Though the current administration has gone through great lengths to assure the American people of the benefits of the Affordable Care Act, their recent slew of delays and exemptions suggest that the HHS is itself unsure of how to implement the law. The possible opt out appears to work in a criteria not much stricter than the honor system, people can exempt themselves if they
“believe that the plan options available in the [ObamaCare] Marketplace in your area are more expensive than your cancelled health insurance policy" or "you consider other available policies unaffordable."
While it is still unclear how this rule change would be implemented, and whether it would constitute a practical delay in the individual mandate, the apparent lack of coherent policy does not speak well for the health insurance overhaul. There is also speculation that a possible Mandate delay might be linked to the dismal insurance registration estimates.
“The answers are the implementation fiasco and politics. HHS revealed Tuesday that only 940,000 people signed up for an ObamaCare plan in February, bringing the total to about 4.2 million, well below the original 5.7 million projection. The predicted "surge" of young beneficiaries isn't materializing even as the end-of-March deadline approaches, and enrollment decelerated in February.”
Meanwhile HHS Secretary Kathleen Sebelius is emphatic in her denial of an individual mandate delay. The Hill reports that during a hearing at the House Ways and Means Committee, Rep. Kevin Brady (R-Texas) questioned the possibility of a delay:
“Given the problems caused by ObamaCare's faulty website last year, Brady asked Sebelius directly if delays to the individual mandate or enrollment deadline would be next.”
“No, sir,” Sebelius responded.”
While she seems adamant in her defense of deadlines and rules, the fact remains that Obamacare’s implementation has suffered delays, setbacks, exemptions, and waivers far exceeding the parameters of the original law. Simply put, there is a strong case to be made that a president in such blatant disregard of the law is acting unconstitutionally. Even though the Secretary is adamant in her defense of HHS policy, Republican lawmakers already seem to smell blood in the water
In other words, the administration is moving in a quasi-repeal in which the mandate stands, but anyone can opt out of it by checking a box. What remains even less clear than the mechanisms of the opt-out is the economic health of the entire house of cards that is Obamacare. Without the individual mandate (harmful as it is) there is no way to ensure the survivability of the American Health Care Industry.
There is at least one benefit from this fracas: at least Representative Pelosi is starting to find out what is in the bill which cost her the House.
Photo Credit: Mr.TinDC
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ATR urges Tennessee Lawmakers to Reject Hotel Tax Hike, End Taxpayer-Funded Lobbying
Grover Norquist, president of Americans for Tax reform, sent a letter to Tennessee lawmakers in support of HB 2293 and in opposition of HB 2506. HB 2293 would allow county officials to end the practice of using taxpayer dollars to hire the very lobbyists who push for tax increases while HB 2506 would increase the cost of travel by permitting a 20 percent increase in local hotel occupancy taxes. The bills are currently pending in committee. The text of the letter is as follows:
Dear Members of the Tennessee House,
I write today regarding HB 2293 & HB 2506, two bills of importance to Tennessee taxpayers. I urge you to support HB 2293, legislation that allows a county commission or appropriate taxing authority to eliminate taxpayer-funded lobbying from school board budgets. I urge you to oppose HB 2506, a bill that would permit a 20 percent increase in local hotel occupancy taxes.
Taxes already make up far too high of a proportion of the cost of travel. Taxes currently account for a whopping 39% of the cost of the average hotel stay. HB 2903 would increase the tax burden associated with travel at a time when legislators should be looking to go in the opposite direction by reducing taxes and mitigating the negative impact they have on the Tennessee economy.
Speaking of tax increases, often the biggest proponents of higher taxes are taxpayer-funded lobbyists. HB 2293 would allow county officials to put a stop the odious practice of using taxpayer dollars to hire lobbyists. This is a common sense piece of legislation that lawmakers should approve before adjourning the 2014 session.
Over the past several years, Tennesseans have seen over 20 new or higher federal taxes imposed on them from Washington. In light of this, it is imperative now more than ever that the legislators in Nashville not pile on with further tax increases. As such, I urge you to reject HB 2506, the bill to permit local option hotel tax hikes; and support HB 2293, much-needed legislation that would allow country officials to end the dubious use of taxpayer dollars on lobbyists.
Americans for Tax Reform will be educating your constituents as to how their representatives in the legislature vote on these important matters. If you have any questions or if ATR can be of assistance, please contact Patrick Gleason, ATR’s director of state affairs, at email@example.com or 202-785-0266.
Grover G. Norquist
Photo Credit: w4nd3rl0st (InspiredinDesMoines)
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Ohio Should Follow Indiana’s Lead and End its Electricity Mandate
The state of Ohio should take note of the recent legislative accomplishments in Indiana with regard to Indiana’s electricity reduction mandate. Ohio currently has in place the Ohio Electricity Usage Reduction Mandate, which requires Ohio’s electricity distribution utilities (EDUs) to reduce their customer’s electricity usage in increasing amounts each year. Similar to the Ohio energy reduction mandate, the state of Indiana has an energy reduction mandate called the “Energizing Indiana” program. Unlike Ohio however, Indiana has realized that the costs of the reduction mandate greatly outweigh any potential benefits to rate payers and businesses.
Recently, Indiana State Senator Jim Merritt “authored a bill that would phase out the Energizing Indiana program by the end of the year.” As of Monday, Senator Merritt’s bill passed the Indiana General Assembly with a 37 to 8 vote. Senator Merritt’s bill will now be presented to Governor Mike Pence for approval, and if approved Energizing Indiana would be phased out by December 2014. Gov. Pence, being the good conservative that he is, would do well to make this legislation law.
In support of the bill, Senator Merritt cited the fact that “since 2009, the Energizing Indiana program has cost rate payers $500 million and will cost as much as $1.9 billion more by 2019.” As a direct result of the Indiana mandate, residents were being charged $1.50 per month to fund Energizing Indiana.
Alternatively, Ohio residents are paying almost three times the amount of Indiana residents to fund the electricity reduction mandate. Currently Ohio rate payers are paying almost $4.00 a month for an energy reduction benefit of only $0.37 cents a month. The discrepancy between the cost and benefit of the Ohio mandate is blatantly obvious in that paying $4.00 for something worth only $0.37 cents is clearly illogical.
Additionally, the compliance burden under the Ohio electricity reduction mandate is so great that that Ohio EDUs will have spent over $1 billion in compliance costs by the end of this year. Because the Ohio mandate increases each year, Ohio EDUs compliance budgets are increasing 12 percent each year in response. In turn, those compliance costs are passed onto Ohio rate payers. If the current 12 percent compliance budget growth rates continue, by 2020 “Ohio ratepayers will be paying over $500 million per year as a result of the Ohio mandate.”
To show just how much of the cost of the Ohio electricity reduction mandate is passed on to Ohio residents, take a look at the Ohio EDU AEP-Ohio Columbus Southern (AEP-Ohio). AEP-Ohio began charging residential customers 0.289 cents per kWh ($0.00289) in September of 2012 to fund its energy use reduction mandate budget. A typical AEP-Ohio customer using 750 kWh per month would incur a charge of $2.17 per month to fund the energy reduction mandate. Thus, “the mandate cost paid by a typical AEP-Ohio Columbus Southern zone residential customer was at least seven times greater than the price suppression benefit.” Essentially, AEP-Ohio customers are required to pay one dollar for every 15 cents of claimed price suppression benefit they received. The results are the same compared to other Ohio EDUs. Dayton Power & Light residential customers were forced to pay $3.90 per month for a $0.37 cent benefit.
Just like Indiana’s Energizing Indiana program, the Ohio electricity reduction mandate is all cost and no benefit for consumers and businesses. Indiana Senator Merritt stated in support of his repeal bill that if “energy efficiency policies aren’t leading to cost savings, they aren’t doing their job.” Clearly, the Ohio electricity usage reduction mandate is an energy efficiency policy that isn’t doing its job. As such, Ohio should follow suit and take action to repeal the Ohio electricity reduction mandate before Ohio consumers and businesses further suffer.
Photo Credit: Charles E. Carstensen (photo has been resized)
Governor Kasich's Tax Plan Less Than Inspiring
Ohio Governor John Kasich has unveiled his Mid-Biennium Review (MBR) and the best that could be said about it is that it contains the good, the bad, and the ugly.
First, the good. Gov. Kasich’s proposal enacts another round of income tax cuts in the State of Ohio, building upon the across the board 10-percent cut that he signed into law last year. All in all, Gov. Kasich’s new income tax cut would reduce the tax burden on Ohio taxpayers by $461 million in FY2015, $816 million in FY2016, and $909 million in FY 2017; totaling nearly $2.2 billion in tax relief over three years.
While the new round of income tax rate reductions is laudable. Ohio will continue to have a staggering NINE income tax brackets and an equally confusing and convoluted municipal income tax regime remains unaltered. An attempt to streamline and consolidate the state’s municipal tax system via House Bill 5 was unfortunately hijacked by special interests and watered down into little more than a weak gesture towards any real reform.
On their own, Gov. Kasich’s income tax cuts would grow the Ohio economy – unfortunately, however, Gov. Kasich has also proposed a round of tax increases; including higher taxes on tobacco products, e-cigarette/vapor products, higher oil and gas severance tax, and a hike in the Commercial Activity Tax (CAT).
The MBR proposal would see a 15-percent increase in the state CAT tax. Essentially, the CAT tax is a penalty on doing business in the state of Ohio measured by a business’s gross receipts. By 2017, the increase in the CAT tax would amount to a $743 million tax increase.
Ohio’s oil and gas industry does not escape Gov. Kasich’s tax increases either. The MBR proposes to increase the severance tax rate to 2.75-percent of a producer’s gross receipts – a primary pay-for for the proposed income tax cuts. One of the most startling components of the oil and gas tax increase, however, is the divergence of 20-percent of severance tax revenue to local governments in shale oil and gas producing regions. The state monies would be overseen by a new government bureaucracy called the Ohio Shale Gas Regional Commission (a nine member board appointed by the Governor). On the positive side, Gov. Kasich is pushing for the elimination of severance taxes on small convention gas producers – less than 910,000 cu.ft/quarter). All-in-all, the severance tax increase would amount to an $874 million tax hike by 2017.
Another troubling component of Gov. Kasich’s MBR is the regressive tax hike placed on tobacco consumers. Over a two year period Ohio’s tax on cigarettes would increase from $1.25 to $1.85 a pack. This tax increase will be borne primarily by lower-income earners. Even more important, tobacco taxes have repeatedly proven to be a declining source of revenue and an inadequate pay-for for permanent income tax reductions.
Along the same lines of the proposed tobacco tax increase, Gov. Kasich has proposed an equivalent tax on e-cigarette and vapor products. Currently, under Ohio law, these products are not taxed in the same manner as tobacco products. The fact is, e-cigarettes and vapor products are not equivalent to tobacco products and are often used as a means to quit harmful combustible tobacco products.
In total, the Governor's MBR tax plan amounts to a $174 million tax cut for Ohioans over three years. Gov. Kasich should work with lawmakers in Columbus to craft a pro-growth tax reform measure, consolidating income tax brackets while reducing the tax burden and simplifying the mess that is the municipal income tax regime. Avoiding any “rob Peter to pay Paul” schemes would be key in this process. Yes, Ohio needs to continue its efforts to reform the tax code, but doing so on the backs of the oil and gas industry, Ohio businesses, tobacco consumers, and vapor product consumers is not the way to achieve this.
UPDATE: This post has been updated to reflect that Ohio's Earned Income Tax Credit is non-refundable and therefore is a tax cut and not government spending. In total, the MBR amounts to a $174 million tax cut over three years.
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Federal Government Spending Billions on Faulty State Exchanges
In November, a month after the disastrous rollout of Obamacare, ATR’s Alyssa Canobbio reported that the Obama Administration Spent $4.5 Billion on State Healthcare Websites. Of the states collecting federal grant money to help build, run, and maintain state exchange websites, five states are responsible for spending at least $1 billion of the total $4.5 billion federal taxpayer dollars. Although the five states received disproportionate federal funding to ensure sites were running properly and on time, their state exchange websites epitomize the shortcomings of the online market place under the Affordable Care Act. Here is a quick rundown of how each state got themselves into this predicament and where they are now:
Oregon: Total Federal Grants: $305,206,587
Although Cover Oregon was touted as one of the White House’s favorite health exchanges, reality quickly set in when enrollees were devastatingly low. Now Oregon is forced to consider scrapping the entire website. More troubling is the fact members of Congress have called for a federal investigation into how Cover Oregon managed to spend $305 million on a broken exchange.
Vermont: Total Federal Grants: $208,232,414
The independently operated Vermont Health Connect used CGI, the former lead contractor for HealthCare.gov, and faced a myriad of issues just like their federal counterpart. The state exchange was not functioning on October 1 and problems with small business insurance options have persisted and remain unfixed today. Like Oregon, Vermont lawmakers are also requesting a federal investigation into the much maligned state-run website.
Hawaii: Total Federal Grants: $205,342,270
Hawaii received gracious federal funding to create an online health exchange, and the state also shelled out an additional $120 million into the Hawaii Health Connector. Problem is, Hawaii has the lowest number of enrollees of all the states, only 4,300. The low number is less alarming when considering the smaller population, but when federal and state contributions are added together, each enrollee has cost taxpayers roughly $75,500.
Massachusetts: Total Federal Grants: $179,036,455
The Massachusetts online exchange, called the Connector, is labeled as “America’s Worst-Performing ObamaCare Exchange” by Forbes. According to Forbes, the website has encountered numerous problems of users trying to enroll, and has only enrolled 5,428 people, a mere .02% of the first-year goal. Massachusetts will continue to work with CGI, but has paid technology firm Optum another $10 million to help fix the site.
Maryland: Total Federal Grants: $171,013,111
Leading up to the launch of Maryland’s online exchange, it would have been wise for state officials to listen to warnings about the ill-fated website. Instead, the website launched as scheduled and subsequently has encountered continued technical problems. Earlier this week it was announced that the Maryland Health Benefit Exchange voted to terminate the $193 million contract with its IT contractor, Noridian Healthcare Solutions.
These five exchanges prove that throwing billions of dollars towards the development of online exchanges is pointless if the whole underlying framework is flawed. Taxpayers have funded the underperforming and dysfunctional state exchanges and will continue to suffer unless key issues, both technical and legislative, are properly addressed.
Photo credit: Shane T. McCoy
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EPA Bureaucrats Use Federal Charge Cards for Gym Memberships and Gift Cards
A report released by the Environmental Protection Agency’s Inspector General has found that EPA employees have improperly used federal charge cards to purchase everything from gym memberships to gift cards. The report indicated that over 90 percent of the sampled transactions were for prohibited, improper, or erroneous purchases, all paid for by American taxpayers. Ironically, Senate Democrats Monday night carried on an all-night filibuster in the hopes of generating even more power and funding for the EPA.
In order to compile the report, the Office of the Inspector General obtained a spreadsheet of 67,000 EPA transactions from Fiscal Year (FY) 2012, and randomly selected 69 transactions. They additionally selected 11 transactions that seemed inappropriate because of the name of the merchant involved. For instance, some transactions were with merchants listed as dance halls, child care organizations, music venues and theatres. Of the 80 transactions sampled, 75 were for prohibited, improper, or erroneous purchases. The 80 transactions sampled totaled $152,602 and $79,254 (52%) of which were for prohibited, improper, or erroneous purchases.
The report outlined nine specific internal control oversight issues, ranging from the approval of prohibited transactions by EPA officials to the outright failure to maintain transaction records. Of the primary internal control oversight issues, four were particularly outrageous, and the report found that of the transactions sampled:
- 35% of cardholders did not verify the receipt of purchases;
- 30% of cardholders did not obtain required approval prior for purchases;
- 25% of cardholders did not obtain funding prior to purchases; and
- 18% of approving officials never reviewed purchase logs.
Some specific instances of EPA employee misconduct were so egregious they are worth mentioning. In three instances, cardholders purchased gym memberships totaling $2,867. Two of those purchases were not even for EPA employees but for family members. Cardholders further violated EPA guidelines regarding inappropriate food purchases:
“Although light refreshments are defined as those that do not include portions of food typical of a meal, in one of our samples, light refreshments included all elements of a meal for an awards ceremony. Four different appetizers, chicken tenderloin, fresh fruit, pasta salad, large cookies, soft drinks and punch were purchased at a cost of $2,900. Meals are not an allowable expense for an awards recognition ceremony.”
The report also found that the purchase of gift cards by EPA cardholders was also a problem in seven transactions. For example, in one transaction 20 American Express gift cards were purchased totaling $1,588. Additionally, the report highlighted an instance where EPA employees blatantly violated records keeping requirements in that:
“Two transactions totaling $26,152 could not be located despite instructions to maintain supporting documentation. The EPA’s policy requires the retention of documentation for 3 years on a fiscal year basis. Cardholders were not attentive to this basic requirement. In two cases, the cardholders left their positions and no arrangements were made to retain the records. In another transaction the cardholder stated that records were not kept because of privacy concerns. This lack of documentation increases the risk that purchases could be fraudulent, improper or abusive.”
It must also be pointed out that the report focused on only 80 transactions out of 67,000, ninety-two percent of which turned out to be prohibited or improper. For FY 2012, the EPA had "1,370 active cardholders that transacted more than $29 million in purchases." The EPA also had "309 convenience check writers who wrote more than 1,000 checks totaling more than $500,000." It is very likely the 80 transactions sampled are just the tip of an iceberg characterized by improper and wasteful spending of federal funds.
The ultimate irony is that a similar report conducted in 2008 found the exact same internal control weaknesses as those found in the most recent report conducted by the Inspector General. Due to an obvious inability of EPA officials to correct these internal control weaknesses, there is no guarantee that any of the prohibited and improper conduct by EPA employees will change.
An obvious culture of improper spending has developed at the EPA with little to no oversight. Thus in years to come Americans could again find themselves paying for EPA employees’ gym memberships, gift cards, and whatever else may strike their fancy.
Photo credit: Neon Tommy (Photo has been resized)
Did not see any recommendations on charging them and then firing them.....that is a crime, misuse of a credit card.
Can't be shocked at this really--Look at what Barry and Michele get away with doing on our dime.
This is a nice article, but chump change compared to what is out there.
People don't 'learn' to do this on their own; they're like kids who will get away with whatever they can if allowed to do so.
Its the 'systemic' abuse that is a result of poor accountability, a 'culture' of such, so that it will not change overnight, and will not change until people of integrity at the top begin to change things.
The system does not reward those in the rank and file who are not 'going along with the program'.
Again, the sheep follow the shepherds...