There has been some interesting coverage lately about Florida Sen. Marco Rubio’s successful effort to ensure that taxpayers were not on the hook for excess losses incurred by insurers participating in Obamacare’s exchanges. Today, however, two Associated Press reporters alleged that this victory against the law was one that Rubio “didn’t deliver.” But the facts show that Rubio is right, and the AP is wrong.
The House reached a deal late Tuesday on a $1.1 trillion spending bill and a huge package of tax breaks. Throughout Tuesday, major components of the spending legislation appeared to be falling into place, including an agreement to alter major provisions of the Affordable Care Act, delaying a planned tax on high-cost health insurance plans and suspending a tax on medical devices for two years. Lawmakers also agreed to delay the Cadillac tax on high-cost employer-sponsored health plans by two years, originally scheduled to take effect in 2018.
The tax policy in the ACA is inefficient, at odds with the objective of raising revenue with as minimal interference on economic decisions as feasible, and not supportive of long-term growth. The overwhelming economic burden of the ACA taxes will fall on those in the middle-range income brackets. These are among the reasons that Senate conservatives used the recent reconciliation bill to repeal every single one of the ObamaCare taxes. Unfortunately, the president is expected to veto this effort.
Conservatives may get another bite at the apple – albeit with less than perfect policy – in the so-called extenders bill now before Congress. Specifically, reports indicate that the bill would provide for a 2-year halt of the medical device tax, a 2-year delay of the Cadillac tax, and a 1-year moratorium of the “premium tax” (the annual fee on health insurers).
The Obama administration created a “risk corridor” program to help prop up insurers who lost money in the first three years of ObamaCare where profitable insurers would pay some of those profits into a pool to help insurers who lost money. If the amount insurers lost exceeded what the companies paid in, the government would step in and make up the difference. Calling this “a taxpayer-funded bailout for insurance companies,” Rubio last year quietly inserted language into the omnibus government spending bill that barred the Department of Health and Human Services from dipping into general funds to pay failing insurers. “While the Obama administration can still administer the risk-corridor program, for one year at least, they won’t be able to use taxpayer funds to bail out insurance companies,” Rubio said.
The two-year “Cadillac tax” delay under consideration by Congress is the worst kind of special-interest legislation. It will enrich labor unions and big business at the expense of taxpayers. ObamaCare’s Cadillac tax is a clunky but constructive first step in reforming the employer tax exclusion. It has problems—its structure as an excise tax is punitive, and it contains carveouts for favored Democratic constituencies—but the basic idea of equalizing the tax treatment of employer- and individually-purchased health insurance is a good one.
The lone health insurance cooperative to make money last year on the ObamaCare insurance exchanges is now losing millions and suspending individual enrollment for 2016. Maine’s Community Health Options lost more than $17 million in the first nine months of this year, after making $10.9 million in the same period last year. A spokesman said higher-than-expected medical costs have hurt the co-op. An Associated Press review of financial statements from 10 of the 11 surviving co-ops shows that they lost, on average, more than $21 million in the first nine months of this year.
The 2015 United Auto Workers union contracts with General Motors Co., Ford Motor Co. and Fiat Chrysler Automobiles NV allow the companies to alter hourly-worker health plans if they are likely to trigger a 40% federal tax on some high-cost health-care plans. The most likely change: adding yearly deductibles for affected workers.
Instead of more federal regulation and subsidies, what U.S. health care needs is adoption of market principles, starting with broad empowerment of the patient-consumer. The proposals advanced in this volume would replace many counterproductive and outdated federal policies with practical, market-based reforms that aim to provide all Americans with access to high-quality health care at affordable prices.
Individuals who do not obtain health coverage, through any source, are subject to a tax penalty unless they meet certain exemptions. The penalties under the so-called individual mandate were phased in over a three-year period starting in 2014 and are scheduled to increase substantially in 2016. This analysis from the Kaiser Family Foundation provides estimates of the share of uninsured people eligible to enroll in the marketplaces who will be subject to the penalty, and how those penalties are increasing for 2016.
Those without health insurance have a lot to consider. On one hand, the fine for remaining uninsured steeply increases for next year. On the other, the cost of the individual mandate penalty is cheaper than buying the least expensive insurance plan for 7.1 million of the nearly 11 million uninsured eligible to enroll in health exchanges, according to a Kaiser Family Foundation analysis released Wednesday.