• Unfortunately for taxpayers, the Obamacare bill is now the Obamacare law.  Now, some Congressional Democrats want to pour salt in the wound by making Obamacare even worse through the regulatory process-and likely in violation of the Constitution
  • One provision of Obamacare was the so-called "medical loss ratio" (MLR) rule.  This price control requires health insurance companies to spend a certain amount of their health insurance premiums on health care itself.  If they don't spend "enough" on health care, then insurance premiums are supposed to be rebated up to that point.
  • In calculating this "MLR," insurance companies are allowed to use after-tax income as their starting point.  This is only fair, since you can hardly require insurance companies to pay benefits out of taxes they've already given to the government.  The law is explicit: Section 2718(b) of the law specifically excludes "federal and state taxes" from the pool of money on which the MLR is calculated.
  • This would include the federal and state corporate income tax, federal and state payroll taxes, and federal and state excise taxes (including the ones newly-created in Obamacare itself).  The language simply could not be clearer.
  • Despite the seemingly-closed status of this question, three Congressmen (Chairman Sandy Levin of Ways and Means, Chairman Henry Waxman of Energy and Commerce, and Chairman George Miller of Education and Labor) and three Senators (Chairman Max Baucus of Finance, Chairman Tom Harkin of HELP, and Chairman Chris Dodd of Banking) sent an August 10th letter to HHS Secretary Kathleen Sebelius seeking to "clarify legislative intent" on the relationship between taxes and the MLR rule.  You see, Congress only meant that new taxes created by the Obamacare law itself could be excluded from the calculation.  This is clearly not what the law says, and this "clarification" is a cheap ploy to make a bad law worse without a new vote in Congress.
  • The effect of this exclusion would be to run all but the largest health insurance companies out of business.  Think about it in your own life: suppose the government says you have to give half your income to charity, but it's your gross income.  Even if your after-tax income is only $0.70 on the $1.00 of your gross income, $0.50 still has to go to charity.  Is that fair to you?  Could you afford that?
  • Conservatives shouldn't be fooled by this cheap trick.  Trying to effect through regulation what couldn't be passed through an overwhelming Democrat majority in Congress is outrageous, but it's to be expected.  As their Congressional majorities are endangered, expect to see the regulatory process hijacked to make Obamacare even worse.  It will be up to Congress next year to police Secretary Sebelius and others who will try to make the law even worse than what Congress passed

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