How Obamacare “Works”

$12 billion ain't exactly chicken feed:

President Barack Obama's decision to delay implementation of part of his healthcare reform law will cost $12 billion and leave a million fewer Americans with employer-sponsored health insurance in 2014, congressional researchers said Tuesday.

The report by the non-partisan Congressional Budget Office is the first authoritative estimate of the human and fiscal cost from the administration's unexpected one-year delay announced July 2 of the employer mandate - a requirement for larger businesses to provide health coverage for their workers or pay a penalty.

The analysts said the delay will add to the cost of "Obamacare's" insurance-coverage provisions over the next 10 years. Penalties paid by employers would be lower and more individuals who otherwise might have had employer coverage will need federal insurance subsidies.

"Of those who would otherwise have obtained employment-based coverage, roughly half will be uninsured (in 2014)," CBO said in a July 30 letter to Representative Paul Ryan, Republican chairman of the House of Representatives Budget Committee.

Under Obama's healthcare reform law, employers with 50 or more full-time workers were supposed to provide healthcare coverage or incur penalties beginning January 1. But the requirement will now begin in 2015.

The delay intensified doubts about the administration's ability to implement Obama's signature domestic policy achievement and stirred Republican calls for a similar delay in another Obamacare mandate that requires most individuals to have health insurance in 2014.

Note that the decision to delay the implementation of Obamacare was made by an imperial presidency that isn't being called an imperial presidency by all of the people who were worried about the supposed imperial presidency of George W. Bush, because now that their guy is the imperial president in question, having an imperial presidency is presumably not a big deal anymore.

Oh, and there is also this:

Be careful you don't fall off the Obamacare "cliff" when the boss asks you to put in some overtime.

Working more could ultimately mean thousands of dollars less for you under a quirk in the new health-care law going into effect this fall. This could prompt some people to cut back on their hours to avoid losing money.

"Working more can actually leave you worse off," the price-comparison site ValuePenguin.com notes in a new analysis.

"It's sort of an absurd scenario," said Jonathan Wu, ValuePenguin.com's co-founder. "It's something for people to be aware of."

In that scenario, an individual or family whose annual income surpasses maximums set by the federal government—if only by $1—will totally lose subsidies available to buy health insurance under the Affordable Care Act.

The loss of those subsidies in some cases will mean that people potentially would have been better off financially if they had worked less during the year, Wu said. And they then would have to work significantly more to make up for the lost subsidy.

"I think they'd be surprised to see how drastic it is," said Wu. "I'd be kind of shocked to see if I make $100 less (in total income each year), I get all these benefits, but if I make $100 more, I get nothing."

"You basically don't want to fall in that hole," said Wu, adding that he believed contractors and others with more control over their incomes would be apt to adjust their hours worked to avoid the subsidy cliff.

Don't you love how much we are finding out about the health care "reform" bill, now that we have passed it?

Health Care “Reform” and a Revealing Quote

Remember the Obama administration's decision to delay the implementation of the employer mandate section of Obamacare? Sure you do. Now, check out the following quote from Democratic operative Chris Lehane on why the delay is a good idea for the Obama administration and for Democrats:

"You’d have preferred to avoid this. On the other hand, you potentially go into the midterms now in a situation where people are getting savings, and you’re not going to have the potential peril of some small businesses or restaurant owners making people part-time,” Lehane said.

(Emphasis mine.) Yeah, let's not worry about small business or restaurant owners making more and more workers part-time. Let's worry about those calamities after people have voted in 2014, and let's take them off the table for now so that the people don't vote against Democrats next year. That's the important thing.

Note, by the way, that Lehane doesn't even try to deny that as a consequence of health care "reform," we will increasingly see full-time employees moved to part time status in an already weak economy. And other Democrats don't really try to deny it either.

From the Annals of Irresponsible Government

This is frankly scandalous:

If you've been reading all the Obamacare stories lately, you might get the impression that the administration has just realized it will not be able to implement the massive health reform as designed.

It has known for months.

As far back as March, a top IT official at the Department of Health and Human Services said the department's current ambition for the law's new online insurance marketplaces was that they not be "a Third-World experience." Several provisions had already been abandoned in an effort to simplify the administration's task and maximize the chances that the new systems would be ready to go live in October, when customers are supposed to start signing up for insurance.

In April, several consultants focusing on the new online marketplaces, known as exchanges, told National Journal that the idealized, seamless user experience initially envisioned under the Affordable Care Act was no longer possible, as the administration axed non-essential provisions that were too complex to implement in time. (Read the story for some examples and commentary.) That focus has intensified lately, as officials announced that they would not be requiring employers to cover their workers next year or states to verify all of their residents' incomes before signing them up for insurance.

So, we have a soon-to-be disaster on our hands. Note the part about not verifying residents' incomes. More on that here:

The White House seems to regard laws as mere suggestions, including the laws it helped to write. On the heels of last week's one-year suspension of the Affordable Care Act's employer mandate to offer insurance to workers, the Administration is now waiving a new batch of its own ObamaCare prescriptions.

These disclosures arrived inside a 606-page catch-all final rule that the Health and Human Services Department published on July 5—a classic Friday news dump, with extra credit for the holiday weekend. HHS now says it will no longer attempt to verify individual eligibility for insurance subsidies and instead will rely on self-reporting, with minimal efforts to verify if the information consumers provide is accurate.

Remember "liar loans," the low- or no-documentation mortgages that took borrowers at their word without checking pay stubs or W-2s? ObamaCare is now on the same honor system, with taxpayers in tow.

People are supposed to receive subsidies only if their employer does not provide federally approved health benefits. Since HHS now won't require business to report those benefits or enforce the standards until 2015, it says it can't ask ObamaCare's "exchange" bureaucracies to certify who qualifies either.

HHS calls this "a slight technical correction" though it is much more than that. The exchanges will not only start dispensing benefits "based on an applicant's attestation" about his employment insurance status. HHS is also handing the exchanges "temporarily expanded discretion to accept an attestation of projected annual household income without further verification."

In other words, anyone can receive subsidies tied to income without judging the income they declare against the income data the Internal Revenue Service collects. This change has nothing to do with the employer mandate, even tangentially. HHS is disowning eligibility quality control because pre-clearance is "not feasible" as a result of "operational barriers" and "a large amount of systems development on both the state and federal side, which cannot occur in time for October 1, 2013."

Since people will not have their incomes verified, they have every reason to lie in order to get subsidies, which may stretch federal expenditures to the limit, and which may prevent those who really need subsidies from getting them. Needless to say, this is a problem.

Meanwhile, former federal judge and current law professor Michael McConnell goes after President Obama for unilaterally suspending the employer mandate provisions of the new health care law:

Article II, Section 3, of the Constitution states that the president "shall take Care that the Laws be faithfully executed." This is a duty, not a discretionary power. While the president does have substantial discretion about how to enforce a law, he has no discretion about whether to do so.

This matter—the limits of executive power—has deep historical roots. During the period of royal absolutism, English monarchs asserted a right to dispense with parliamentary statutes they disliked. King James II's use of the prerogative was a key grievance that lead to the Glorious Revolution of 1688. The very first provision of the English Bill of Rights of 1689—the most important precursor to the U.S. Constitution—declared that "the pretended power of suspending of laws, or the execution of laws, by regal authority, without consent of parliament, is illegal."

To make sure that American presidents could not resurrect a similar prerogative, the Framers of the Constitution made the faithful enforcement of the law a constitutional duty.

The Justice Department's Office of Legal Counsel, which advises the president on legal and constitutional issues, has repeatedly opined that the president may decline to enforce laws he believes are unconstitutional. But these opinions have always insisted that the president has no authority, as one such memo put it in 1990, to "refuse to enforce a statute he opposes for policy reasons."

Attorneys general under Presidents Carter, Reagan, both Bushes and Clinton all agreed on this point. With the exception of Richard Nixon, whose refusals to spend money appropriated by Congress were struck down by the courts, no prior president has claimed the power to negate a law that is concededly constitutional.

Read the whole thing. Obviously, many of those who made a big deal of George W. Bush's signing statements will have little to nothing to say about this. Heck, they have had little to nothing to say about Barack Obama's signing statements.

Consequences of the Employer Mandate Delay

This article, by Thom Lambert, is quite valuable. And the following excerpt is very revealing indeed:

. . . Suppose an employer wishes to provide $40,000 in total compensation to a 40 year-old employee who is the head of a four-person household. If the employer were to purchase a family policy for the employee (approximate cost $12,000/year), she would pay the employee $28,0000/year in cash. The employee would pay no payroll or income tax on the component of his compensation provided as health insurance, so he would receive an effective federal subsidy of $2,718 (22.65% * $12,000). If the employer were to drop health care coverage and thus drive the employee to an exchange, the employer would have to pay $2,000 and would therefore reduce to $38,000 the total amount she would pay the employee. The employee would then receive all his compensation — all $38,000 — as take-home pay. On the $12,000 that otherwise would have been paid as benefits, he’d have to pay $2,718 in tax, but he would now be eligible to purchase insurance on his own at a heavily subsidized rate. The ACA would limit his out-of-pocket insurance expense to 4.52% of annual income ($1,718), which means he would receive a whopping $10,282 subsidy on the $12,000 family policy. This employee is $5,564 better off if his employer drops coverage (costing him $4,718: $2,718 in foregone tax subsidy plus a penalty-induced compensation reduction of $2,000) and allows him to access the more generous subsidies available on state exchanges (benefiting him by $10,282).

This is the huge problem with the ACA’s Employer Mandate/subsidy scheme: The scheme as a whole creates incentives to dump lower-income employees on the subsidized exchanges. The Obama Administration’s politically expedient delay in implementation of the Employer Mandate does nothing to alleviate this difficulty. But it might  help Nancy Pelosi get her old job back.

And that's all that really matters, isn't it?¹

1. I know, I know; it's shocking to think that politics may be behind this. Still, it's worth mentioning.

Obamacare's Employer Mandate: Delayed

Avik Roy  has the scoop. The mandate was never popular, so one naturally senses politics being behind this decision. As Roy notes, the mandate might have driven up unemployment, so delaying it for a year might keep unemployment from becoming even more of an issue during the 2014 midterm election cycle. Additionally, as Roy points out, delaying the mandate will cause more people to want to enroll in the individual insurance exchanges set up by the Affordable Care Act. The following from Roy's post is also notable:

The Affordable Care Act is quite clear as to the effective date of the employer mandate. “The amendments made by this section shall apply to months beginning after December 31, 2013,” concludes Section 1513.

The executive branch is charged with enforcing the law, and it can of course choose not to enforce the law if it wants. But people can sue the federal government, and a judge could theoretically force the administration to enforce the mandate.

So the question is: Would anyone sue the Obama administration over this? Employers, of course, will be thrilled to be spared the mandate for one more year. Democratic politicians, similarly, will be glad to have this not hanging over their heads for the 2014 mid-term election.

The wild-card is left-wing activists. Most, you’d think, would defer to the administration on questions of implementation. I’m no lawyer, but it seems to me that all it would take is for one judge to issue an injunction, for an activist to require the administration to enforce the mandate.