Natalie De Vincenzi

Norquist Op-Ed Urges Opposition to Fiduciary Rule Overreach

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Posted by Natalie De Vincenzi on Monday, June 13th, 2016, 10:08 AM PERMALINK

Writing for Morning Consult, ATR President Grover Norquist calls for action against Obama's executive and regulatory overreach, specifically overreach regarding the fiduciary rule.

As Norquist notes, the Department of Labor does not have enforcement and examination authority to push forward the fiduciary rule. Instead, jurisdiction over the issue resides with the Securities and Exchange Commission.

This means that there are severe problems with the DoL fiduciary rule as written. As Norquist notes:

“The rule creates a “best interest” standard of conduct that investment advisors must meet when representing the interests of their clients. While there is broad agreement amongst industry groups and consumers that such a standard should exist, the mandates associated with the existing rule are so broad and lack clarity that they are open to wide interpretation. Some economists have even warned the standard is an “open-ended obligation with seemingly no bounds.”

The costs of this regulatory overreach will not be significant and have astounding effects on retirement savings. As Norquist notes:

“Although there has been no official in-depth analysis of the rule, some have predicted it may result in up to 7 million IRA holders being priced out of investment advice and result in 300,000 to 400,000 fewer IRAs being opened every year. All told, some fear this regulation could result in more than $80 billion in lost savings.”

A lawsuit by several business groups in Texas was recently filed in an effort to block the fiduciary rule.  As Norquist notes, this is the latest effort to stop the rule following multiple efforts by conservative in Congress to block the rule.  Indeed, conservatives should have no hesitation supporting this latest effort:

“The ill-conceived rule must be repealed or struck down. Leaders in Congress have already worked tirelessly for years to stop the fiduciary rule and ensure a common-sense standard is implemented, but these efforts have yielded few results. Given this failure, conservatives should continue fighting any efforts to stop Obama’s regulatory overreach. Lawsuits like the one brought forward by industry leaders to block the fiduciary rule should be vigorously supported as an alternative, and possibly last chance to stop this crushing new set of regulations.”

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House Anti-Poverty Taskforce Releases Innovative Blueprint of Solutions

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Posted by Natalie De Vincenzi, Alexander Hendrie on Friday, June 10th, 2016, 12:31 PM PERMALINK

Our welfare system does not work.  The War on Poverty started more than 50 years ago, yet the poverty rate has remain unchanged. Spending has doubled in the past ten years and is projected to reach $1 trillion in the next ten. Clearly, we are throwing money at a problem with little to show in results.

Things need to change and House Speaker Paul Ryan (R-Wis.) and the Republican conference this week unveiled an innovative platform to reform how we address poverty. The blueprint outlines five principles based around Rewarding work, tailoring benefits to people’s needs, improving skills and schools, planning and saving for the future, and demanding results.

ATR applauds the work of the Task Force on Poverty, Opportunity, and Upward Mobility for its innovative proposal.

Encourage and reward work

The best way to escape poverty is with a good job, yet most welfare programs fail to help people find work, instead encouraging a culture of dependency.  In order to ensure that Americans are on the path to self-sufficiency, this blueprint calls for reforming the Temporary Assistance for Needy Families (TANF) program and unemployment insurance to better help put people on the pathway to good jobs.

Currently, 44 percent of households who receive assistance are capable of working, but report no annual income. So, reforms should be put in place that expand work requirements to include housing benefits.

The blueprint also approaches unemployment insurance in a new way by shifting focus onto helping people who are out of work get back to work faster and this can be accomplished by giving states greater flexibility and testing those results. The longer one is unemployed, the harder it is to for one to get a job.

These proposals are broadly supported. A poll conducted by the Heritage Foundation found that 89% of Americans agree that work-capable adults should be required to work in order to receive government benefits.  Helping Americans get back on their feet as soon as possible should be a priority regardless of political ideology.

Adjust benefits to align with people’s needs

As it currently stands, you can be left in a worse financial position by working more hours. People start losing benefits as soon as they start making money, and you can be penalized for getting married, getting a raise, or simply starting work. It’s why people often find themselves stuck in a “poverty trap”. Reforms in this area call for more flexibility with program funding, benefits, and housing assistance so that welfare is not a case of one size fits all.

Currently, the federal government mindlessly matches state and local spending on poverty initiatives. Instead of this approach, programs should receive funding based on results, with those that are failing to work slowly phased out. In addition, benefits should ensure you aren’t penalized for getting married or getting promoted, and housing assistance should be linked to prevalence of jobs, so people can move to areas with more jobs and opportunities rather than being confined to poor communities.

These reforms are crucial to ensuring that people get the most out of benefits and aren’t left in a worse off financial situations.

Actions need to be reflected in results

The government throws taxpayer dollars at programs, many of which are failing. The anti-poverty blueprint calls for reforms to ensure that programs actually produce results, and if they don’t that funds are better spent. The blueprint calls for several reforms, including pay-for-results partnerships, a tier-based funding formula, and stronger accountability measures.

Specifically the task force calls for the government to work with private-sector providers through pay-for-results partnerships, meaning that if the program achieves its stated goals the investment will be repaid by the government. This method of goal setting fosters state competition and filters out programs that are not meeting goals, which ultimately holds companies accountable and ensures taxpayer dollars are well spent.

Strengthen Education and Skills

Children need to be exposed to more opportunity at every development stage to ensure the cycle of poverty can be broken. The blueprint calls for more open access to healthier meals, more targeted job training that coincides with available jobs in a community, and new measures to better inform parents about educational choices for their child. These reforms will improve early childhood development and promote a stronger workforce.

Planning for the future

For many Americans, the tools to save for retirement are out of reach. To fix access, the blueprint calls for reforms that ensure families have access to affordable retirement advice and access to 401(k)s is expanded. These simple, yet important reforms will help low and middle income families who presently cannot afford retirement advice and will encourage all Americans to start saving responsibly.

 

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CBO Report Confirms PROMESA Contains NO Bailout or Federal Expenditure

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Posted by Natalie De Vincenzi on Wednesday, June 8th, 2016, 9:00 AM PERMALINK

An analysis by the Congressional Budget Office (CBO) confirms that H.R. 5278, the Puerto Rico Oversight, Management, and Economic Stability Act (PROMESA) contains no bailout and no federal expenditures. Under H.R. 5278, direct spending is increased by $370 million, but all expenditures are to be paid for by the Puerto Rican government. Members of Congress should have no hesitation supporting PROMESA as the fiscally responsible solution to the Puerto Rico debt crisis.

PROMESA creates an oversight board, which is intended to address Puerto Rico’s $70 billion debt. To do so, the board has responsibility overseeing the fiscal and budgetary matters of Puerto Rico and facilitating voluntary restructuring of this debt. If needed, the board can perform additional restructuring, but only as a last resort.

H.R 5278 clearly outlines the duties of the oversight board, of which a majority is appointed by lists put together by Republican leaders in Congress. As the report states, the board is to:

  • “Ensure that fiscal plans and annual budgets developed by the governor and legislature of Puerto Rico and territorial instrumentalities meet certain accounting standards and fiscal requirements;

 

  • Review and approve such fiscal plans and budgets (or, if necessary, develop alternative plans that meet all such standards and requirements);

 

  • Monitor ongoing budget execution to identify any differences between projected and actual revenues and expenditures; and

 

  • Determine whether any such differences require corrective actions, including potential reductions in certain nondebt expenditures, hiring freezes, or other measures to reduce expenditures.”

 

This bill also creates a legal framework for restructuring debt that applies solely to territories, not high spending states like Illinois and California. Passing PROMESA best addresses the territory’s financial calamity without instituting a taxpayer bailout or granting super chapter 9 bankruptcy. As the report notes:

“The bill would prohibit Puerto Rico from issuing any new debt without the board’s approval and would grant the board the sole authority to approve agreements to restructure existing public debt. Title III of the legislation would outline procedures—enforceable in U.S. courts—for such debt restructuring.”

Because Puerto Rico is a United States territory, Congress is obligated to act under Article IV, Section 3 of the Constitution. In addition, the island’s 3.5 million residents are all U.S. citizens and failure to act will mean these citizens simply relocate to other parts of the country.

PROMESA, unlike other proposals, incorporates the protection of private property rights, minor minimum wage relief, and pro-growth economic reforms while ensuring that this fiscal crisis is controlled and stabilized without a taxpayer funded bailout. Members of Congress should have no hesitation supporting and voting for PROMESA. 

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State Mismanagement Meant Cover Oregon Obamacare Exchange Doomed from the Start

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Posted by Natalie De Vincenzi on Friday, June 3rd, 2016, 9:17 AM PERMALINK

State mismanagement and bureaucratic incompetence led to the botched launch of the $305 million Cover Oregon Obamacare exchange. Specifically, Cover Oregon can trace its failure from the lack of a single point of authority combined with its decision to serve as its own systems integrator.

As a report released by the House Committee on Oversight and Government Reform notes, there were multiple issues with the project that ultimately contributed to its failure:

“An overly ambitious project scope and technically inexperienced (and constantly changing) leadership caused challenges for Cover Oregon. Those challenges were compounded by Oregon’s ambitious health care initiative, which was the source of discord among the various state agencies and organizations developing the exchange, especially the Oregon Health Authority and Cover Oregon.”

These many issues resulted in the failure to launch by the October 2013 deadline. This botched launch, combined with political corruption, a failure of federal oversight, and unrealistic plans led to the ultimate demise of the Cover Oregon exchange.

The lack of a single authority to keep the project on track and mediate the different entities resulted in complete chaos and unaccountability. A report by First Data, a technology solutions company, revealed that there were numerous management problems with the Cover Oregon project:

Differing Priorities: Three different organizations worked on the same project, all with different priorities. As the report notes:

“A common theme from the assessment interviews was that the entities involved (Cover Oregon, OHA, and DHS) had different, and sometimes competing, priorities.  As a result, these disparate entities did not always function as a cohesive unit.”

Ineffective Communication: The project, already far behind schedule, was stymied even further from ineffective communication between the three organizations. As the report states:

“It is clear that communication across agencies was ineffective and at times contentious. The lack of a single point of authority slowed down the decision making process and contributed to inconsistent communication, and collaboration across agencies was limited at best.”

Fragmented Authority and Decision-Making: The lack of one authority muddled communication and decision making among the three entities. As the report points out:

“Authority was not only parceled out to multiple committees, but was also fragmented across Cover Oregon, OHA, and DHS. To complicate things further, all of these entities were making different decisions for the same project.”

Organizational Conflict and Lack of Transparency: Each entity was not transparent with one another on the projects, resulting in hostility and overall choleric attitudes, especially among leadership. As the report indicates:

“Organizational conflict between OHA and Cover Oregon, especially at the leadership level, was highlighted often. An email exchange between Rocky King [Executive Director of Cover Oregon] and Carolyn Lawson [OHA Chief Information Officer] from June 12-13, 2012, clearly illustrates that the two leaders were not effectively leading the two teams collaboratively.  Statements in the e-mails characterized the interactions as ‘lobbing rocks over the fence in a defensive, accusatory and inaccurate way’ and ‘This is not good communication and certainly continues to create an environment based on distrust and information.’ In the interview with Rocky King, he stated, ‘The relationship did not develop between OHA and Cover Oregon-no transparency.’

Aside from having lack of leadership across the entities working on Cover Oregon, the project was crippled from Oregon’s decision to act as its own systems integrator.  As the committee report notes, “documents and testimony show Cover Oregon’s failed launch was caused in part by the decision not to hire a systems integrator,” which only increased the amount of risk that Oregon took on for the project. A review of this exchange conducted by First Data revealed that using a system integrator “created a lack of accountability on the project” and “contributed to a lack of scope control, a delay in requirements definition, and unrealistic delivery expectations.”

At the same time as this mismanagement occurred, federal officials responsible for overseeing the Cover Oregon project failed to do their job. Officials instead hailed the project as a “model exchange” and granted Oregon millions more in federal funding even though Maximus, Oregon’s quality assurance manager, raised red flags.

State mismanagement and poor federal oversight meant that Cover Oregon Obamacare exchange was doomed to fail. Given the findings of this report, it is clear that taxpayer dollars should be recovered. 

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Ohio’s Obamacare Co-op Shutting its Doors

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Posted by Natalie De Vincenzi on Tuesday, May 31st, 2016, 3:59 PM PERMALINK

With the end of Obama’s presidency approaching, the end of the ill-fated Obamacare co-op experiment appears to be fast approaching too. Last week, The Ohio Department of Insurance announced that InHealth Mutual, the Obamacare co-op operating in the state would shut down and enter into receivership. This news makes InHealth Mutual the 13th Obamacare co-op to fail, a reckless experiment that has resulted in well over a billion in taxpayer dollars wasted.

Co-ops are not-for-profit alternatives to traditional insurance companies created under Obamacare. The Centers for Medicare and Medicaid Services (CMS) financed co-ops with startup and solvency loans, totaling more than $2.4 billion in taxpayer dollars. In theory, they would provide member-driven care and would not need to worry about recording a profit. In practice, they have failed to become sustainable.

The Obama administration originally provided $129 million in loans and funding to help the Ohio co-op set up. Despite this infusion of cash, the co-op struggled to operate, posting a loss of $80 million last year at a time the co-op was under strict federal oversight.  The failure of Ohio’s Obamacare co-op leaves 22,000 Ohioans looking for insurance.

Ohio’s InHealth, is only one of the failed co-ops, and the losses on this program only represent a slight amount of the actual losses from the co-op program, which amount to billions. Of the 23 co-ops that were created with federal loans, more than half have failed including those in Tennessee, Nevada, New York, and Louisiana.  All but two of the 23 co-ops experienced losses while operating in an Obamacare exchange, so it is almost certain that more will collapse.

This failure of Obamacare co-ops should not be surprising. As a report by the Daily Caller’s Richard Pollock found, they were plagued with poor management and high salary payouts. 17 of the 21 co-ops paid out gratuitous salaries to executives reaching as high as $587,000, which is more than four times as much as the $135,000 median health insurance executive salary. Worse still, many of these executives had little to no experience in the insurance industry and some of these excessive salaries were disguised in financial documents as “management fees”.

Federal management over co-op funds was little better, as CMS allowed some co-ops to classify loans as assets on their financial documents rather than debt. This reclassification allowed co-ops to appear successful when they were in fact on the brink of failure.

Co-ops were also hit by lower than expected Obamacare enrollment and the poor performance of exchange marketplaces. Many co-ops were hoping to receive significant funding from the risk corridor program, which was designed to encourage insurers to take on high-risk individuals. In theory, the revenue neutral program would transfer funds from insurers who made money on an Obamacare exchange to those that experienced losses, but so many insurers faced losses that CMS was only able to issue 12.6% of the payments that were requested.

The government has wasted billions on these Obamacare co-ops. The failure of more than half of these co-ops points to the overall failure of the Obamacare law. While 10 co-ops still remain, the viability of these remaining co-ops is very minimal and they are likely to nose-dive, like the other 13 botched co-ops.

A list of all failed Obamacare co-ops and taxpayer funds spent is below:

CoOportunity Health - Iowa and Nebraska
Cost: $145,312,100

Louisiana Health Cooperative, Inc.
Cost: $65,790,660

Nevada Health Cooperative 
Cost: $65,925,396

Health Republic Insurance of New York
Cost: $265,133,000

Kentucky Health Care Cooperative - Kentucky and West Virginia
Cost: $146,494,772

Community Health Alliance Mutual Insurance Company - Tennessee
Cost: $73,306,700

Colorado HealthOp
Cost: $72,335,129

Health Republic Insurance of Oregon
Cost: $60,648,505

Consumers' Choice Health Insurance Company - South Carolina
Cost: $87,578,208

Arches Mutual Insurance Company – Utah
Cost: $89,650,303

Meritus Health Partners – Arizona
Cost: $93,313,233

Consumers Mutual Insurance – Michigan
Cost: $71,534,300

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Organ Donor Shortage Must Be Addressed

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Posted by Natalie De Vincenzi on Friday, May 27th, 2016, 9:20 AM PERMALINK

Our nation faces an alarming organ shortage. Every day, twenty-two people die because they cannot get a transplant and the donor wait list is more than 121,000 people long.

Depending on the organ, wait lists can be up to ten years long, past the point a patient can survive.  Not only does this lead to a loss of life, but this also drains Medicare and other social service funds, which ultimately places a burden on taxpayers.

Each transplant can save an average of $745,000 in medical costs, of which 75 percent of the savings is to taxpayers.  Additionally, a patient who has received a kidney transplant has an added 10-15 years when compared to those who remain on dialysis. If the supply of transplant kidneys increased, taxpayers could save more than $5.5 billion per year in medical costs.

The Organ Donor Clarification Act, introduced by Congressman Matt Cartwright (D-Pa.), addresses our nation’s pressing organ shortage, and eradicates the taxpayer burden.

First, the act allows for the creation of pilot programs in order to test the promotion of organ donation through non-cash incentives. It should be noted that this legislation has no budgetary impact, it solely authorizes the creation of programs, which must be approved through the normal process.

Second, this legislation clarifies that certain reimbursements, such as travel or medical care expenses do not constitute “valuable consideration.” Under current law, organ donors are prohibited from receiving any valuable consideration in exchange for their donation. This is meant to prevent individuals from selling their organs but also serves as a disincentive for otherwise prospective donors because they are prohibited from being reimbursed for common expenses.

It is imperative that we address the nation’s organ donation shortage, and the Organ Donor Clarification Act does so. It will save both lives and taxpayer dollars. ATR supports this bill and encourages all Members of Congress to co-sponsor and support the Organ Donor Clarification Act. 

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Massachusetts' Legislature Gives Preliminary Approval to Millionaire's Tax

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Posted by Natalie De Vincenzi on Thursday, May 26th, 2016, 3:31 PM PERMALINK

Last week, the majority of Massachusetts state legislators voted in favor of a constitutional amendment to enact a “millionaire’s tax.” The organization, Raise Up, collected the necessary signatures needed in order to bring the millionaire’s tax measure to the legislature. This proposal would apply a 4.0 percent surtax on income above $1 million, which would be levied on top of the Bay State’s 5.1 percent flat income tax. The good news is, despite legislative action last week, enactment of such a tax hike is far from imminent. The Boston Globe’s Evan Horowitz explains:

“For one thing, backers need something more than a new law; they need a constitutional amendment — because at present the state constitution doesn’t allow for differential tax rates.”

An 80 percent tax surge would hit small businesses especially hard, as the majority of small businesses file under the individual income tax system. The IRS accounts that more than 3,000 small businesses in Massachusetts report incomes over $1 million. The proposed millionaire’s tax would severely burden small business and stymie future economic growth for the Bay State.

The Globe’s Horowitz, explains how this matter would not be resolved until 2018 at the earliest:

“Amending the state constitution is a multi-step process. First, a quarter of legislators have to approve the amendment, which is what’s happening Wednesday. Then, in the 2017-2018 legislative session, they have to approve it again. Only then can it go to voters in the form of a ballot initiative.

This lengthy process has a potentially worrisome correlate. If it turns out there’s an error or problem with the amendment — or merely some ambiguity requiring clarification — addressing it could require another four-year process of constitutional re-amendment.”

Support of only 50 of the 200 state legislators were needed to advance the constitutional amendment. There was more than enough votes to move forward with the amendment, with votes totaling 102 to 50 in the House and 33 to 7 in the Senate.

Massachusetts voters have smartly rejected calls for a progressive income tax five times over the last five and a half decades. Increased reliance on upper income households makes state revenues more volatile, as California, New York, New Jersey, and Connecticut have first-hand experienced. The millionaire’s tax proposed in Massachusetts will make state revenue collections less stable, budgeting more difficult, and will make the commonwealth less competitive with other states around the country, many of which –such as Texas, Florida, North Carolina, and Tennessee—have been reducing and phasing out income taxes. 

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Largest Insurers Fleeing Arizona's Obamacare Exchange

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Posted by Natalie De Vincenzi on Wednesday, May 25th, 2016, 1:13 PM PERMALINK

Unsustainable losses from Arizona’s Obamacare exchange have forced the nation’s largest insurance provider, United Healthcare, to cease operations in the state's exchange. In addition, BlueCross BlueShield, the second largest insurance provider has stated that it will “evaluate all options,” which may result in some Arizona counties with no insurance company provider coverage.

Even with billions in corporate welfare payment to insurers and subsidies to enrollees, insurers remain unable to break even. Even as insurers begin to flee, federal bureaucrats continue to invent new ways to recklessly spend taxpayer dollars keeping this law afloat.  

Given these two companies are the only providers in some counties, their exits will almost certainly have a chilling effect on Arizona Obamacare enrollees, especially those in rural counties who already had few options. If larger companies with the economics of scale to absorb major losses cannot survive on Obamacare exchanges, smaller insurance companies have little chance of survival.

Obamacare finances its programs through a web of wasteful and cronyist spending programs, but these are still not enough for the system to work, as proven with Arizona. In fact, many of these programs -- both on the enrollee side and the insurer side -- do not work, or have been abused by the government to make billions in illegal payments.

On the enrollee side, individuals have access to the advanced premium tax credit (APTC) and cost-sharing reduction (CSR) payments. The tax credit reduces the cost of health insurance premiums for enrollees, but the federal government has repeatedly failed to verify whether it is properly making payments.

Worse, CSR payments – which reduce out-of-pocket health insurance costs – have been paid out for several years despite Congress never appropriating any money for these payments. This practice was recently declared illegal by a federal court. According to an estimate from the Congressional Budget Office, illegal CSR payments would have totaled more than $150 billion over 10 years if not stopped.

On the insurer side, Obamacare plans are subsidized through three programs: Obamacare reinsurance, risk corridors, and risk adjustment. Like the APTC and CSR payments, these three programs have been abused by government bureaucrats.

In theory, the risk corridor program encourages insurers to take on high risk individuals by transferring funds from insurers who made money on an Obamacare exchange to those that experienced losses. In practice, the budget neutral program was only able to bring in 12.6 percent of what insurers requested for 2014, totaling $360 million. Again, the federal government attempted to unlawfully pay the full 100 percent, only to be blocked by Congress.  

Another program, Obamacare reinsurance, takes funds from employer-provided health plans and funnels it to Obamacare exchanges. This program also failed to take in as much as the federal government promised, and yet again the administration has ignored the law in an attempt to bail out insurers. Using $6 billion raised from a hidden health insurance fee and through diverting $1.7 billion from the Treasury Department, the Obama administration has illegally funneled $3.5 billion into the reinsurance program in order to bail out insurers.

Unfortunately, this is not a pattern unique to insurers in Arizona. UnitedHealth has warned that it will have no chance but to leave most Obamacare exchanges and other insurers may soon follow. The exodus of insurers from Arizona’s Obamacare exchange -- and nationwide -- proves that this law is not working, even with billions in wasteful and unlawful payments and subsidies. 


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