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).
Last week, the U.S. Senate approved legislation that would repeal the majority of ObamaCare. The bill will almost certainly pass the House. From there, it will go to the president’s desk, where it faces an even more certain veto. Even so, we are witnessing a historic moment. The House and Senate have held dozens of votes to repeal ObamaCare in whole or in part. Congressional Republicans have even worked with President Obama to repeal or curtail portions of the law. But while full-repeal legislation has passed the House, nothing like the bill that just passed the Senate has come anywhere near the president’s desk.
Gallup’s latest poll shows the majority of Americans still oppose the ACA, even two years after its full implementation. Those who are uninsured oppose the health care law by nearly 30 points.
Proponents of more than doubling the current minimum wage of $7.25 appeared to have overlooked a simple fact. Thanks to government mandates such as Obamacare, today’s minimum wage already effectively amounts to $10.46 an hour. If we more than double the nominal minimum wage to $15, we actually will be requiring employers to pay $18.31 an hour.
Maybe the pending King v. Burwell decision will finally put Obamacare out of its misery. No matter what President Obama or Health and Human Services secretary Sylvia Burwell say, the truth is Obamacare is just limping along as another misguided, over-priced and underperforming government program.
Just a few years ago, lawmakers in this left-leaning state viewed President Obama’s Affordable Care Act as little more than a pit stop on the road to a far more ambitious goal: single-payer, universal health care for all residents.
Then things unraveled. The online insurance marketplace that Vermont built to enroll people in private coverage under the law had extensive technical failures.
Earlier this week, news surfaced that some HealthCare.gov users may have received an incorrect subsidy or Medicaid eligibility determination from the Marketplace. According to reports, HealthCare.gov has been counting Social Security income received by children when calculating the Modified Adjusted Gross Income (MAGI) for a household. Once calculated, MAGI is then used to help determine a household’s eligibility for Medicaid or subsidized private insurance. By including a child’s Social Security Income in a household’s income, the Federally-facilitated Marketplace (FFM) likely increased the overall household income, which could have resulted in some persons either not qualifying for Medicaid or an inaccurate tax credit determination. While CMS has acknowledged the error, the agency has so far not given an indication of how many households may be impacted.
The Obama administration is dialing up the pressure on a handful of states that have resisted expanding Medicaid coverage for their low-income residents under the federal health care overhaul.
The leverage comes from a little-known federal fund that helps states and hospitals recoup some of the cost of caring for uninsured patients. The administration says states can just expand Medicaid, as the health care law provides, and then they wouldn’t need as much extra help with costs for the uninsured.
Two top targets so far are Florida and Texas, with large numbers of uninsured residents. Both have received several billion dollars in recent years from Washington under the so-called low income pool, also known as LIP.
Florida’s hospital funding is the first of the nine states — which include Tennessee, California, Massachusetts, Arizona, Hawaii, Kansas and New Mexico — to expire on June 30. But the hospital funds are an optional program, not entitlement programs like Medicaid, meaning the federal government has broad discretion whether to grant them, experts say.
“There’s no doubt that other states that haven’t expanded Medicaid are watching this,” said Joan Alker, Alker, executive director of the Georgetown University Center for Children and Families.
The IRS is blaming Obamacare for the agency’s poor customer service, with Commissioner John Koskinen telling Congress on Wednesday that he has had to take money away from answering phone calls and instead spend it on technology and personnel to carry out President Obama’s health care law.
Just 43 percent of taxpayers’ phone calls are being answered so far this year. Mr. Koskinen warned that it would get worse without an infusion of money and Americans may start to feel emboldened to cheat on their taxes.
The IRS chief said Congress didn’t provide additional money to prepare for Obamacare and the tax penalty filings that began this year, so he shuffled at least $100 million from user fee funding that had been going to customer service.
“Because of the zero funding for the Affordable Care Act and [the Foreign Account Tax Compliance Act], the only way we could implement those statutory mandates … in the last year was to move a significant part of that support for taxpayer service into the IT accounts,” Mr. Koskinen said.
Thirty-six states that rely on private managed care programs to provide medical services to all or some of their Medicaid recipients are facing an added ObamaCare tax.
According to a report by Milliman consulting actuaries, states that contract with Medicaid managed care plans face up to $15 billion in added costs over 10 years for their share of the law’s tax on private health insurance.
States will pay even if they strongly oppose ObamaCare and are refusing to establish health insurance exchanges or expand Medicaid.
The health law imposes an annual tax on private health insurance plans – a tax designed to recoup what some call their “windfall” from the millions of new customers they could gain because of the law. The tax on health insurers was expected to raise a total of $8 billion in 2014 and as much as $150 billion over the next 10 years. It is one of 20 designed to fund ObamaCare’s expanded coverage.
Most Medicaid managed care organizations (MCOs) are considered private plans and therefore are subject to the new tax. But this punishes states that are trying improve their Medicaid programs: They are working to make Medicaid more efficient and save money by contracting with private managed care plans to provide medical care to recipients. States that stay with the antiquated fee-for-service Medicaid program escape the levy.
Insurers have rightly argued that this tax will be passed along in the form of higher premiums. Milliman calculates the tax will increase Medicaid premiums by up to 2.5%. In recent years, states have allowed premium increases of only 1 or 2% annually, with some states actually cutting payments to plans, according to the report.
If Medicaid HMO plans are required to pay the new tax out of their profits, many would exit the market rather than operate at a loss. Further, the fee is considered an “excise tax” which is not deductible from corporate income taxes, amplifying its impact.
The Milliman report estimates the ObamaCare health insurer fee will increase Medicaid managed care premiums between $37 billion and $42 billion over ten years. Because both the states and the federal government share in funding Medicaid, the states’ collective share is expected to be between $13 and $15 billion.
Milliman explains this means that the federal government is taxing itself as well as state governments. The feds get their money back because all of the revenues from the health insurance tax accrue back to the federal government.
But the states are left to figure out how to pay their share of the ObamaCare bill – either by further clamping down on payments to Medicaid plans or cutting other state services.
Adding to the constraint: A boost in payments to primary care physicians treating Medicaid patients expired January 1, putting added pressure on states to fill the gap. A study by the Urban Institute estimates that primary care doctors who have been receiving the enhanced payments will see their fees for cut by an average of 43%. Millions of new Medicaid enrollees could face provider shortages if fees revert to pre-ACA levels.
The need to allow a boost in payments to account for the new tax as well as pressure to continue the increase in Medicaid primary care rates puts added pressure on already burgeoning state Medicaid budgets.
While Medicaid managed care is a low-margin business, most states allow plan operators a reasonable profit margin to encourage their participation. Joseph Swedish, chief executive officer at WellPoint , explained in a conference call with investors earlier this year that states “understand the need for a sustainable Medicaid program,” and passing along the fee “is part of sustainability.” Most states consider taxes to be reasonable and unavoidable costs of doing business and incorporate them into payments to the plans.
The Obama administration has not provided much-needed guidance to the states about how to handle fee negotiations with managed care plans involving the added taxes.
About 70% of Medicaid managed care premiums were paid to for-profit MCOs in 2010. In 2010, approximately 50% of all Medicaid recipients were enrolled in Medicaid managed care plans, rising to more than 60% this year.
Punishing states for using Medicaid managed care is yet another ObamaCare attack on private health plans.
According to the Milliman report, Florida could face added costs of up to $1.4 billion over the next ten years to fund ObamaCare, Pennsylvania, $1.3 billion, and Texas, $1.1 billion. Tennessee, where Medicaid recipients are fully enrolled in managed care, could face added costs of $731 million over that time. Maryland will need to come up with $680 million, and Louisiana with $787 million. States that don’t contract with Medicaid managed care plans will not have to pay.
The tax is due regardless of whether or not a state decides to expand Medicaid. The worst decision would be to scrap their Medicaid managed care plans to avoid this new ObamaCare tax. This is one more example why the best solution is to eradicate all of the ObamaCare taxes — along with the rest of the law.