Friday, September 27, 2013

Hats off to Senator Cruz

Agree with him or not, you have to admire that he's willing to take a stand.  In law school,  they had us watch Mr. Smith Goes to Washington during orientation.  They wanted us to remember that sometimes the lost causes are the only ones worth fighting for.  Here's a guy that's actually living that philosophy.  And as agitated as his opponents among the Democratic left and Republican establishment seems to be, maybe this cause isn't lost yet.

We also had another Obamacare delay since my last post.  One of the innovations that's supposed to be in the exchanges is called SHOP.  Basically, SHOP allows small businesses to purchase insurance for their employees.  The online exchange would allow employees to choose among several competitive health plans.

A few months ago, it was announced that SHOP would have only one insurer, that competition was not going to be possible.  Now, the government has announced SHOP will not be ready for enrollment on October 1.  They believe it will be ready some time in November.

The administration claims that this delay is no big deal and in a way they are right.  Enrollment was supposed to open on October 1, but even someone who enrolls on October 1 does not get coverage until January 1.  However, business people will not be able to get their health insurance affairs in order in October so that they can get back to their businesses.

This is just more chaos.  And businesses don't like chaos, especially when it comes to mundane things like employee benefits.

The Small Business Guide to Obamacare made it onto MLive.  If you're really confused about all this, hit the link at the left and pick up a copy of my book.

Anyway, here are Today's Obamacare headlines:

Leftwing Cheerleading

Entrepreneurs should love Obamacare.

Americans don't like shutdown circus.

Frenemies Clinton and Obama unite over PPACA.

Hard News

Affordable policies not affordable to all.

12 biggest Obamacare questions answered.

What you need to know for October 1.

Hollywood Casino in Pennsylvania cuts workers under 30 hours.

Arkansas releases PPACA exchange rates.

What you need to know about the California health exchange and health reform.

Exchange costs revealed.

Sen. Manchin (D, W.Va) says he'll go along with individual mandate delay.

Californians will pay 10th highest rates in country.

For Industry Insiders

Short term coverage an option for some uninsureds.

Delay of individual mandate not possible.

PPACA has many small business incentives.

Agents sign up to sell exchange policies.

13 things employers must do to be PPACA ready.

Tuesday, September 24, 2013

A Handy Checklist for PPACA Compliance

I came across this handy checklist for Obamacare compliance from Amy Gallager of the Cornerstone Group.  If you are an employer you could do worse than printing out her list and taking it with you to see your advisors would be a good idea.  You can then run down that list and address each item.  It won't guarantee you won't get in trouble, but you can greatly increase your odds of success.

If you want more detail on the new Obamacare law, you should check out The Small Business Guide to Obamacare.  I try to give the rules to you as straight as I can, without political posturing or whining.  If you just want to figure out what you can and can't do under the new health law, please read my book.

Now for Today's Obamacare headlines:

Rightwing Rants

Republicans seek end game to Obamacare showdown.

Obamacare is killing employer provided health insurance.

Pelosi looks forward to Obamacare liberation.

Leftwing Cheerleading

Republicans could have healed Obamacare.

Despite the technical glitches, Obamacare will be great.

Plenty of reasons to delay Obamacare.

Hard News

Obamacare divides Republican contenders.

For Industry Insiders

U.S. Territories face PPACA risks.

Monday, September 23, 2013

Legal Theory to Take Out Individual Mandate?

It has been more than a year since Chief Justice Roberts' 4-1-4 decision in National Federation of Independent Business v. Sebelius saved Obamacare's individual mandate.  Since then, I've been pondering whether some other legal theory could cripple Obamacare.

Some lines of attack go against particular problems with how Obamacare is being implemented.  For example, various religious employers have filed suit challenging the requirement to pay for coverage for contraceptions and abortion inducing drugs.  Are those decisions between solely the patient and doctor?  If so, what influence should government or the employer paying the bill have?  Given the split in the circuit appellate courts on the issue, it seems highly likely the Supreme Court will accept a case soon.

A couple other lines of attack are Pacific Legal Foundation's challenge arguing that because the Constitution requires tax bills to originate in the House but Obamacare originated in the Senate, it must necessarily fail.  That case is pending in the D.C. Circuit, one level below the Supreme Court.

In addition, what I see as the most serious threat to the entire scheme, is Oklahoma's argument that exchange subsidies are not allowed in states with a federal exchange (as opposed to a state-run exchange).  Because the penalties under the employer mandate are only triggered when a large company fails to offer insurance AND an employee obtains a subsidized policy on the exchange, the employer mandate is unenforceable in states without a state-run exchange.  No subsidy, no employer mandate penalty.

Supporters of Obamacare argue that there was a drafting error that led to the omission of subsidies in states without their own exchanges.  It seems just as likely, however, that Congress offered the subsidies as an incentive for states to create exchanges.  The lack of subsidies is a penalty on states that don't adopt exchanges.  The IRS has taken the position it can "clarify" the problem by handing out subsidies on the federal exchange.  It seems a stretch that IRS now has the ability not only to collect taxes but to spend treasury dollars.  The Constitution's separation of powers put the power to spend in the legislature, not the executive.  That's why I think it's a big problem for the entire system of penalties on business.

That brings us to an idea I've been considering.  The individual mandate requires nearly everyone in America to obtain health insurance in 2014.  Every year, we will be required to file a piece of paper verifying we have insurance.  If we don't have insurance, we pay a "penalty tax."  In the first few years, the penalties are fairly small but in later years they become greater and greater.

How are we supposed to get insurance?  First, the government expects most people will continue to get employer-provided insurance.  Business will continue to offer insurance because they are forced to do so by the employer mandate.  Some small employers were expected to obtain exchange-based insurance for their employees through a program called SHOP.  Second, people without employer-based insurance can go to an online exchange and choose among private plans.  Depending on income, some people will obtain subsidies.  Third, the federal government is sponsoring an expansion to Medicaid.  States will accept federal dollars to provide free coverage to people below a certain income threshold.  (133% or 138% of poverty level, depending on how you count it).

So what't the problem?  The Obama administration has unilaterally suspended the employer mandate in 2014.  Employers therefore have less incentive to offer insurance.  In addition, the government has limited SHOP to only one offering, rather than the competitive plans that were supposed to be offered.

You can add another problem brought on by the government's enthusiasm.  Many people had so-called mini-med plans.  These were bare-bones plans for people who work at low paying jobs.  Those kinds of plans are largely illegal.  In addition, the Obamacare mandates dramatically increase the cost of private insurance, making them unaffordable or even unavailable for many people.  For example, we received notice that Blue Cross Blue Shield of Michigan will not be renewing its current individual policyholders under the current terms.

The exchanges are due to open October 1, but it's not clear that will happen on time.  If Oklahoma somehow succeeds in its suit and federal subsidies are not available in states without their own exchanges (which is most of them), another attractive path to coverage will close to many people.

Lastly, many states have refused to expand Medicaid.  Under a strict reading of the rules, a person eligible for Medicaid is not eligible for exchange subsidies, even in states without the Medicaid expansion.  In other words, if your income is so low you are eligible for Medicaid, you do not make enough to get an Obamacare subsidy on the exchanges.  IRS has promised not to enforce that rule and will allow lower income people to keep their subsidies, but I don't know that we can rely on that?

Here's where we come out of that funnel--it's not fair.  The individual mandate penalties assume lots of ways to get coverage which should be affordable to everyone.  In practice, that's not true.  The government has failed to make good on its promises that underly the justification for penalizing people without insurance.

Turning that notion of injustice into a legal theory is difficult.  I think the best approach may be to argue either under due process or equal protection that the individual mandate penalties lack a rational basis tied to a legitimate legislative goal.  Certainly, expanding insurance coverage to make the system run better would count as at least a legitimate goal.  People do get sick and injured and there needs to be a way to pay for their care.  Although there might be better ways of achieving that goal, "legitimate" does not mean best, it more or less means "not crazy."

But penalizing someone for failing to obtain insurance rational when the ways to obtain insurance contemplated by the legislation don't exist is not just unfair, it's "irrational" and just plain crazy.  How does the government advance the cause of universal coverage by penalizing people for failing to buy insurance that's no longer available.  It's as if the government mandated public transportation but banned railways and buses.

Who's the ideal plaintiff?  Someone who is eligible for Medicaid, lives in a state without the Medicaid expansion, and once had coverage through work but lost it thanks to PPACA's mandates.  Here is someone who really cannot afford coverage at full price and the avenues to coverage are blocked.  Importantly, the impediments to coverage are not the fault of the individual but rather arise from conscious decisions of people in power.  Certainly, this kind of plaintiff would elicit sympathy from anyone.

Maybe someone will bring such a suit.  The basic idea is simple--if the government decides not to enforce the employer mandate to provide insurance it cannot enforce the individual mandate.  The one assumes the existence of the other.

Now, for Today's Obamacare Headlines:

Rightwing Rants

Obamacare's supporters live in the past.

Obama confuses legislative voting as "messin' with me."

Obamacare?  No thanks, I'll pay the penalties.

Leftwing Cheerleading

Obamacare stars as villain in Alabama special election ad.

CNN panel loves Obamacare.

Republicans pick the wrong fight with defunding.

What GOP could learn from Obamacare.

Obama slams Republicans over defunding fight.

USA Today sees opposition to Obamacare as "hostage taking."

Obamacare is GOP's Waterloo.  (I guess she assumes the Republicans are the French).

Hard News

Senators say Obamcare defunding DOA.

Q&A on Obamacare.

Ten things you need to know about Obamacare.

Rand Paul says we probably can't defund Obamacare.

How to pick an Obamacare policy from the Motley Fool.

Gov. Snyder signs Medicaid expansion for Michigan.

Obamacare defunding fight tests GOP resolve.