Tag Archives: Chuck Schumer

Chuck Schumer Admits Obama Administration Violated the Constitution

Last week, one of Washington’s leading Democrats made what should be considered a stunning admission, yet few in the media bothered to notice, or care. In response to comments from Senate Majority Leader Mitch McConnell (R-KY) about a potential bailout of Obamacare insurers, Minority Leader Chuck Schumer (D-NY) said: “Democrats are eager to work with Republicans to stabilize the markets and improve [Obamacare]. At the top of the list should be ensuring cost-sharing payments are permanent, which will protect health care for millions.”

Schumer’s statement contradicts the Obama administration, which argued in federal court that the cost-sharing reductions are already permanent. It’s also an implicit admission that the Obama administration violated both the U.S. Constitution and federal criminal statutes by spending funds without an appropriation.

Some background on the matter at issue: Section 1302 of Obamacare requires health insurers to reduce cost-sharing (i.e., deductibles, co-payments, etc.) for certain low-income enrollees who buy silver plans on health insurance exchanges. The law directs the secretary of Health and Human Services (HHS) to create a program to reimburse insurers for the cost of providing those cost-sharing discounts. But the text of the law does not actually disburse funds to HHS—or any other cabinet department—to make the reimbursement payments to insurers.

Not wanting to be bound by such niceties as the rule of law, the Obama administration started making the payments to insurers anyway, claiming the “text and structure” of Obamacare allowed them to do so. The House of Representatives sued, claiming a violation of its constitutional “power of the purse,” and last May, Judge Rosemary Collyer agreed, ruling that the administration violated the Constitution.

Schumer Admits Constitutional Violation

Schumer’s statement last Thursday stands out because the Obama administration and House Minority Leader Nancy Pelosi (D-CA) have claimed, both in court and elsewhere, that Obamacare made a permanent appropriation for the cost-sharing payments. The law did no such thing, and a federal district court judge so ruled, but they attempted to argue that it did.

By conceding that Obamacare lacks a permanent appropriation for cost-sharing reductions, Schumer’s admission raises some interesting questions. The Obama administration requested an explicit appropriation for the cost-sharing reduction payments, a request Congress promptly denied. If there isn’t a permanent appropriation for cost-sharing payments in Obamacare—as Schumer admitted—then the Obama administration spent money without an appropriation.

The executive spending money without an appropriation not only violates Article I, Section 9, Clause 7 of the Constitution—“No money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law”—but also the federal Anti-Deficiency Act, which prohibits federal employees from authorizing expenses in excess of available appropriations—which, according to Schumer’s logic, do not exist for the Obamacare cost-sharing reductions.

The Anti-Deficiency Act includes not just civil, but criminal, penalties: “An officer or employee of the United States Government or of the District of Columbia government knowingly and willfully violating [the Act] shall be fined not more than $5,000, imprisoned for not more than 2 years, or both.”

By calling on Congress to “ensure” permanent cost-sharing reductions, Schumer has essentially admitted that President Obama violated the Constitution, and members of his administration may have violated federal criminal statutes by spending money without an appropriation. This prompts one other obvious question: When will Schumer endorse a special counsel to investigate these matters?

Don’t Endorse Law-Breaking

In deciding to pay the cost-sharing subsidies without an appropriation, the Obama administration and its allies have endorsed a strategy of ends justifying means: They wanted to provide health insurance to more Americans, therefore it was acceptable to violate the Constitution. And if the administration violated the Constitution long enough, and on a big enough scale, they could change the law to meet their will. Now that a federal court has ruled that President Obama did in fact violate the Constitution, that’s exactly what Pelosi and Schumer want to do: Change the law to accommodate the Obama administration’s law-breaking.

Conservatives shouldn’t buy it for a second. While liberals want the entire dispute to focus around ends—“Insurers must receive these payments, or millions of Americans will suffer!”—conservatives interested in the rule of law should focus on means: Did the administration violate the Constitution and federal criminal statutes, and who should be held responsible, and how?

Only after those weighty issues have been examined and adjudicated fully should Congress debate whether to appropriate funds for the cost-sharing reductions. To do otherwise would undermine the Constitution that members of Congress vowed to uphold, and further encourage the kind of flagrant law-breaking seen in the Obama administration.

This post was originally published at The Federalist.

Democratic Hypocrisy on Executive Power

In recent months, the press has focused on whether President Trump is “sabotaging” Obamacare—but in so doing, they’ve largely ignored a far bigger story regarding the rule of law. In attempting to defend Obamacare, Pelosi and several of her House colleagues have essentially sabotaged the Constitution, making claims that, if accepted into common practice, would cede massive power to the executive.

The charges of sabotage derive largely from Obamacare’s system of cost-sharing reductions, intended to help certain low-income individuals with deductibles and co-payments. While the law requires insurers to lower individuals’ cost sharing, and directs the Administration to reimburse insurers for those reductions, it nowhere gives the Administration an explicit appropriation to do so.

Questions about whether the Trump Administration might withdraw the cost-sharing payments to insurers therefore represent not sabotage, but a desire to comply with Article I, Section 9, Clause 7 of the Constitution: “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.” The true sabotage comes not from the Trump Administration, but from Democrats themselves, when they failed to include an appropriation in Obamacare seven years ago. Did they have no time between writing Cornhusker Kickbacks and other parochial pork to notice their bill lacked an appropriation for, oh, say, $135 billion?

Democrats Are Sabotaging Themselves on Obamacare

Having first sabotaged Obamacare through their own incompetence, Democratic leaders in the House—bless their hearts—thought it would be a good idea to use the troubled law to give the President even more authority. In a little-noticed development the week before the election, Nancy Pelosi and 10 leading House Democrats filed an amicus curiae brief in an ongoing lawsuit regarding the cost-sharing reductions. The brief justified the cost-sharing payments by claiming “everyone understood” the law included an appropriation, even though the bill’s actual text did no such thing—“We meant to include it, honest we did!”

More importantly, the lawmakers’ brief claimed Congress has little judicial recourse should the executive exceed its authority. Pelosi wrote that not one but both chambers of Congress must initiate a suit seeking to protect the legislature’s prerogatives—which would, due to the Senate filibuster, effectively subject all such suits to a supermajority 60-vote margin in that body. Likewise, the belief that Congress should pass corrective legislation rather than initiating legal action would effectively give the President a veto over any attempt to constrain his power, necessitating a two-thirds majority to clip his wings.

One would have thought that submitting a legal brief giving the executive such broad power one week before last November’s election might have given Nancy Pelosi pause. Pelosi may have been “with her,” but—surprise, surprise!—the voters had other designs. And now Pelosi and her Democratic colleagues could find themselves in a dilly of a pickle.

Obamacare Set A Horrible Precedent

To use but the most obvious example, Chuck Schumer and Nancy Pelosi’s strong objections meant this April’s omnibus spending bill did not include funding for the Trump Administration to complete a border wall. But under the rubric laid out in the lawmakers’ amicus brief last October, President Trump doesn’t need such an appropriation—he can invent one out of whole cloth, and Congress would lack the power to stop him from spending money not appropriated.

Therein lies the danger presented by the Obamacare payment precedent. President Obama’s Justice Department and House Democrats both argued that the structure of Obamacare implies an appropriation that does not exist—giving future Presidents an opening to invent appropriations on any subject upon which Congress has previously opined. And with both the Obama Administration and Democratic lawmakers asserting that Congress’ failure to prohibit such spending permits the President to do so, only a supermajority of lawmakers could prohibit virtually unchecked spending by the executive.

In their attempt to justify their slapdash Obamacare legislating, Democrats have laid the legal groundwork for future administrations to create appropriations where none exist—we literally have to pass the bill so that you can find out what is in it. While Democrats’ inability to include a 12-figure appropriation in a 2700-page bill doesn’t exactly inspire confidence in the legislative process, the answer lies not in yet another executive power grab of the kind Pelosi endorsed last fall. Democrats can whine about Trump’s supposed “sabotage” of Obamacare all they want, but their sabotage to our system of checks and balances would be far worse.

This post was originally published at The Federalist.

Conservatives’ Choice: Power or Principle?

In the days immediately preceding and following the November 8 election, I observed a distinct evolution in thinking among some rightist thinkers. Some went into the election pledging an outright rebellion in the Senate should a Majority Leader Chuck Schumer use the “nuclear option” to muscle through a Hillary Clinton Supreme Court nominee, but mere days later thought that a Majority Leader Mitch McConnell should consider abolishing the filibuster to allow President Trump’s nominee a smoother path to confirmation.

One couldn’t help but hold on to one’s neck for the bad case of whiplash. Some who proudly defended the filibuster as a bastion of deliberative legislating when they feared Democrats would win the White House and take back the Senate suddenly, instead, when presented with a Republican Senate and president-elect, considered this principle a trifling inconvenience. Those situational ethics present a more fundamental question: Are conservatives willing to forego policy “victories” that might result from a raw use of power, when exercising that power violates critical philosophical principles rooted in a belief in limited government?

That’s one prism through which to view Kellyanne Conway’s announcement that the Trump administration may not enforce Obamacare’s individual mandate. Besides the fact that non-enforcement presents policy problems and makes repeal of Obamacare less likely, it violates a principle at the heart of conservatism: The rule of law.

Not Within the Law

The new president’s executive order on Obamacare, released Friday evening, instructed executive agencies to take actions “to the maximum extent permitted by law” to blunt the effects of Obamacare. There are indeed many ways the Trump administration can act within the scope of existing law to provide relief to consumers, many of which I outlined in a report last week. But blanket non-enforcement of the individual mandate doesn’t qualify as being within the law, any more than President Obama’s policy of blanket non-enforcement for certain classes of immigrants fit within statutory parameters.

Observers have noted the last administration’s many examples of executive overreach on Obamacare have given the new administration grounds to provide regulatory relief on multiple fronts. But two wrongs do not make a right. Take, for instance, the following analysis:

The Administration thus used the public pronouncements of its non-enforcement policies to encourage the regulated community to disregard provisions of [the law]. Prospectively licensing large groups of people to violate a congressional statute for policy reasons is inimical to the Take Care clause.

The quote comes from a paper by University of Michigan professor Nicholas Bagley, talking about President Obama’s 2013 “transitional policy” that allowed people facing cancellation notices to temporarily keep their pre-Obamacare plans. But the same description could apply to not enforcing the individual mandate as well. Conservatives believe that forcing individuals to purchase a product is unconstitutional—but so is an executive refusing to enforce the law. Is the answer to a constitutional violation really another constitutional violation?

Major Practical Concerns

Not enforcing portions of Obamacare also presents logistical questions. Effectively eliminating the individual mandate through non-enforcement could worsen adverse selection—when only sick individuals purchase coverage, raising premiums and driving out additional healthy enrollees. As I noted last week, the new administration does have ways within the law to mitigate against this particular problem, but it remains to be seen how effective they will be.

In many cases, non-enforcement could result in lawsuits. The Obama administration’s unilateral actions generally led to more people getting benefits—insurance subsidies, immigration status, etc.—which made it difficult to find someone with standing to sue.

By contrast, if the Trump administration decides (as some have suggested) to give insurers permission to sell policies that do not meet all of Obamacare’s mandated benefits, purchasers of said policies would have grounds to sue insurers. Obamacare’s mandated benefits are prescribed in law, and if the law is clear, its text trumps (pardon the pun) any regulatory edict from the new administration. Most insurers probably wouldn’t even bother offering such policies because of the legal jeopardy and uncertainty they would face in doing so.

Making Repeal Less Likely?

There’s another practical implication of not enforcing the mandate that should worry conservatives: ironically, it could make Obamacare’s repeal more difficult.

Over the past few weeks Washington has debated whether Congress should repeal Obamacare without enacting a simultaneous replacement. Some pundits have been forthright in admitting that they wish to do so because they fear some members of Congress have a different vision of what an alternative regime should look like. To put it bluntly, they wish to hold repeal hostage to their vision for an Obamacare “replacement.”

The executive unilaterally ending some of Obamacare’s worst effects—albeit temporarily—will take the pressure off members of Congress to do so themselves. The justifiable fear is that action on repeal will get bogged down by internecine squabbling over a vision for “replace,” making the sole movement on Obamacare an executive action—which any future president (or even the current one) could overturn.

Reinforce Congress’ Role

If President Trump unilaterally eliminating the individual mandate isn’t the answer, then what is? For conservatives, the solution should lie with the branch the Constitution’s Framers considered the most important: Congress, the legislative branch Article I of the Constitution establishes. Through its oversight powers, Congress has the ability to investigate and act upon regulatory overreach.

The last Congress was less feckless in blunting unilateral executive actions than some might think. Its preliminary victory in the case of House v. Burwell, regarding Obamacare’s cost-sharing subsidies to insurers, set a critical precedent that Congress has the right to litigate on matters of constitutional import—namely, the executive (in this case, the Obama administration) spending funds without an express appropriation from Congress. Hopefully the Trump administration will vacate the Obama administration’s appeal of the District Court ruling, allowing this precedent to stand.

Congress should continue to use its investigatory powers to explore executive overreach. It should obtain from the Trump administration documents regarding the cost-sharing subsidies that the Obama administration refused to disclose, despite subpoenae from Congress ordering them to do so. These documents will reveal why and how the Obama administration created an appropriation these subsidies out of whole cloth. More importantly, continuing to investigate the lawless actions of the Obama administration will send a clear message to dissuade its successors from acting similarly.

Obamacare Is Ultimately About Power

Obamacare was really never about health care so much as power—the power of government to regulate health care, tax health care, and force people to purchase health care (or at least health insurance). It seems somehow fitting that Obamacare gave the nation so many examples of executive unilateralism.

But to conservatives, the rule of law—in many ways the antithesis of raw power—stands pre-eminent. A Republican administration should not be tempted to “use unilateral actions to achieve conservative ends.” Such behavior represents a contradiction in terms. That’s why it’s important to watch the new administration’s actions closely in the coming days and weeks. Obamacare may not be worth keeping, but the rule of law is.

This post was originally published at The Federalist.

Obamacare Meets Monty Python

“’Tis but a scratch!”

So insists the knight after King Arthur cuts off his left arm in the movie Monty Python and the Holy Grail. When Arthur severs his right arm and begs him to surrender, the obstreperous knight again refuses: “Just a flesh wound,” he claims.

Given the disastrous rollout of Obamacare, one could easily conflate Health and Human Services Secretary Kathleen Sebelius’ performance on Capitol Hill recently with Python’s knight scene. Secretary Sebelius had no explanation for what has caused the massive technological failures behind the law’s exchanges, didn’t explain how they would be fixed—and didn’t say who would be held to account for failing to get the implementation right.

In fact, when asked by one Congressman whether the President himself was “ultimately responsible” for the healthcare.gov fiasco, Sebelius responded, “Whatever.”

It’s not the first time Secretary Sebelius has shown such insouciance. “No one is getting fired” over the exchanges’ myriad problems, she claimed last Thursday. She went on to say that “the majority of people calling for me to resign…are people I don’t work for.” This from a public servant receiving a salary of nearly $200,000 per year funded by all federal taxpayers!

The President himself is also in denial about the train wreck unfolding before him. Hours after Sebelius’ testimony, the President pooh-poohed the news that millions of Americans will need to shop for new health insurance after losing their current coverage due to Obamacare. In a speech in Boston, the President tried to blame insurance companies for cancelling policies—due to requirements his administration put into place. In other words, “Nothing to see here. Move it along.”

The President also claimed that individuals losing their current plan will get “a better deal.” However, a recent Heritage Foundation study found that the law will raise premiums in the exchanges in 45 states, in some cases causing rates to more than double. So much for the promise of “bending the cost curve down.”

It’s worth pondering why the left—from President Obama on down—seems unwilling to admit any problem with the law, either in its policy or in its implementation. When Nancy Pelosi famously said Congress had to pass the bill so that we could find out what’s in it, she wasn’t just admitting that she and her colleagues hadn’t read the bill they voted on. She was also implying that—unlike the “visionary” leaders of the left—most Americans simply couldn’t appreciate the true wonder and beauty of Obamacare until we experienced it.

It’s that type of patronizing liberalism—don’t worry about a thing, we know what’s best for you—that led people like Sen. Chuck Schumer, D-N.Y., to claim three years ago that Obamacare would “become more and more popular” once the law passed. It’s what led President Obama to tell Charlie Rose last year that his biggest fault was not any errant decision on policy, but rather failing to “tell a story” to the American people.

Yet the stories of the past month demonstrate a wholesale failure of the entire Obamacare scheme. It’s not just the technology behind the exchanges—although that is a mess. It’s also the people losing their coverage, and the people who won’t be able to afford new policies.

Obamacare is a 2,700-page reminder of Reagan’s famous dictum that the nine most terrifying words in the English language are “I’m from the government, and I’m here to help.” When an entire law is based on those nine words, and isn’t working in the least, the only rational move is to stop the law. Alternatively, one could simply go full Monty Python.

In the Holy Grail, the knight meets an ignominious end. His arms and legs severed, he continues to howl into the wind: “I’m invincible!” The knight’s triumphalist rhetoric has echoed through the Obama administration in recent days. But for both the limbless knight and Obamacare, the facts speak otherwise.

This post was originally published at the National Interest.

Yet Another Poll Shows Obamacare’s Unpopularity

While most reporters have focused on its conclusions regarding the presidential race, the latest NBC News-Wall Street Journal poll also includes survey data on the health care law.  Only 34% of Americans now think Obamacare was a good idea – that’s down from 38% from May 2010, just after the law was passed.  And by a 46% to 40% plurality, Americans support the law’s repeal; fully 36% of Americans strongly support repealing Obamacare.

There was another revealing question included in the survey:  A whopping 11% of Americans think passing Obamacare has been “the most positive accomplishment of the Obama Administration.”  That means that even Obama’s political base is more enthused by his other “accomplishments” than the President’s efforts to ram through the massive 2700 page, $2.6 trillion health care law.  So much for the claims made last year that “As people learn about the bill…it’s going to become more and more popular….Those who voted for health care will find it an asset, those who voted against it will find it a liability…”

Democrats Man the Obamacare Lifeboats

The past several weeks have seen several indications of just how willing and eager Democrats – including the President himself – have become to distance themselves from the unpopular, 2700-page health care law:

  • Bloomberg ran a story last week about how President Obama is afraid to talk about Obamacare to average voters; he mentions the law at political fundraisers, but “he’s just not making the sales pitch in public.”  Even liberals have been flummoxed by the President’s silence on Obamacare; one asked rhetorically, “Why not just own it?”
  • Former Senator Blanche Lincoln blasted the Administration for having “4,200 pages of pending, new regulations to be put on the books that just create huge uncertainty.”  She also sounded skeptical of Obamacare: “We have to be willing to look as we make this journey in health care, not only what we’ve done that’s good, but that things that are not going to work.”  Of course, as many would note, Lincoln voted for Obamacare, and thus bears responsibility for the more than 10,000 pages (NOT a mere 4,200 pages) of new federal regulations and notices that have been issued since March 2010 implementing the law’s mandates and requirements.
  • Two weeks ago, five Democrat Senators wrote to the Administration asking for another Obamacare waiver, finally conceding that the law “may cause disruption for farmers and others in the agricultural sector” by causing members of farmer co-operatives to lose their current coverage.  Among the signatories was New York’s Chuck Schumer, who just last March was claiming that “As people learn about the bill…it’s going to become more and more popular….Those who voted for health care will find it an asset, those who voted against it will find it a liability.”  By asking for a waiver, Schumer has now admitted Obamacare is a political liability for him, because as his constituents learned more about the bill, they found out they could lose their current health insurance coverage thanks to a law he voted for.
  • The most recent Kaiser health tracking poll found that only a bare majority of Democrats (52%) approve of the law, and that approval among Democrats dropped by 13 points in just one month.

Last year Speaker Pelosi famously said we had to pass the bill to find out what’s in it.  More than one year later, many Democrats are finally finding out what’s in the law, and have discovered that they don’t like it any more than Republicans do.

Obamacare Failing to Meet Struggling Americans’ Expectations

Most of the news surrounding the latest Wall Street Journal-NBC News poll has centered around its findings for the presidential campaign – but the survey also revealed some interesting results on the health care front.  Specifically, the survey asked “which one personal worry for you and your family is greatest right now?”  Health care topped the list, at 33 percent, (marginally) ahead of jobs at 32 percent.  And by an over two-to-one margin, respondents found that the Obama Administration had failed to live up to its expectations on health care – only 31% said Obama had met expectations on health care, compared to 64% who said he had fallen short.  Of particular note is the fact that the “meet expectations” number fell 8 points since August 2010, while the number of Americans believing Obama has fallen short on health care has risen by 9 percentage points.  (So much for the claims by Senator Schumer and others that “Now that the bill is enacted, it’s going to become more and more popular.”)

Of course, the American people have every reason to believe that the Obama Administration has not lived up to expectations on health care – because it hasn’t.  To use but one prominent example, candidate Obama said repeatedly his bill would CUT premiums by an average of $2,500 per family – meaning premiums would go DOWN, not merely just “go up by less than projected.”  The campaign also promised that that those reductions would occur within Obama’s first term.  However, the annual Kaiser Foundation survey of employer-provided insurance found that average family premiums totaled $12,860 in 2008, $13,375 in 2009, and $13,770 in 2010 and $15,073 this year.  In other words, while candidate Obama promised premiums would fall by $2,500 on average, premiums have already risen by $2,213 during the Obama Administration.

One of the prime reasons Americans cited health care as their largest personal worry is skyrocketing costs.  Campaign rhetoric aside, Obamacare did precious little to reduce cost growth – spending will actually rise thanks to the law, as will premiums.  It’s one of the most damaging of all the broken promises made by the President on health care, one which will hit millions of struggling families directly in the wallet.

“Thanks Obamacare?” Law’s Popularity at an All-Time Low

In the same week in which activists launched a new “Thanks Obamacare” campaign, this month’s Kaiser Family Foundation health tracking poll explains one reason for the liberal PR re-launch – the 2,700 page law is even less popular than ever.  Among the results from the poll’s summary and toplines:

  • Overall favorability of the law stands at 34%, an all-time low;
  • The percentage of very favorable support stands at 12%, an all-time low;
  • The percentage of respondents who think they personally will be better off due to the law stands at a mere 18%, an all-time low;
  • The percentage of respondents who think the country as a whole will be better off due to the law stands at 28%, an all-time low;
  • Approval of the law among Democrats dropped by 13% in the last month to only 52%, an all-time low.

In other words, eighteen months after Senator Schumer and others claimed that “Now that the bill is enacted, it’s going to become more and more popular,” Obamacare suffered its worst month of polling ever.  It’s one more sign that the only bipartisan element of Obamacare has been the opposition to it.

Just the Facts on Medicare Costs and Insolvency

Senator Schumer is down on the floor now talking about how costs will be higher for future Medicare beneficiaries under the House Republican budget proposal, alleging that a comparison of expected health costs for seniors in 2022 and 2030 by the Congressional Budget Office demonstrates that Medicare beneficiaries will pay much more out-of-pocket under the Ryan plan than under current law.

There is however one minor detail that Senator Schumer conveniently fails to mention: According to the Congressional Budget Office’s March 2011 baseline, by 2020 the Medicare Hospital Insurance Trust Fund will be insolvent – meaning the government will be financially able to pay MUCH less of seniors’ health costs in 2022 than the CBO analysis indicates.  (I’ve pasted the relevant lines from page 4 of the baseline below; note also that Medicare Part A has been running cash-flow deficits since at least last year.)  In order to remain financially solvent through 2022 (let alone 2030), the Medicare program will need a massive tax increase (over and above the more than half a trillion dollars in tax increases included in Obamacare), benefit reductions for seniors, or some combination thereof.

Our nation faces an imminent entitlement crisis.  Passing a $2.6 trillion expansion of government entitlement spending (funded by double-counting Medicare savings) exacerbated the crisis substantively.  Attacking proposed solutions without acknowledging that Medicare is already running deficits, and scheduled to become insolvent within the coming decade, only exacerbates the political sclerosis surrounding entitlement reform.

 

HI Trust Fund Outlays 253.6 270.4 274.2 294.7 308.8 317.0 335.5 348.4 362.8 385.9 408.1 431.5
HI Trust Fund Surplus (+) or Deficit (-) (d) -31.0 -39.4 -29.2 -33.4 -31.1 -23.4 -26.3 -23.8 -22.7 -29.0 (e) (e)
HI Trust Fund Balance (end of year) 278.8 239.4 210.2 176.9 145.8 122.4 96.1 72.3 49.5 20.5 (e) (e)

 

(e) The Hospital Insurance Trust Fund is projected to become exhausted in 2020. Accordingly, certain components of trust fund operations for the year of exhaustion and subsequent years are not meaningful under present law and are not shown in this table.

Bill Summary: Gillibrand Substitute to H.R. 847, 9/11 Bill

As you may be aware, Sens. Gillibrand and Schumer have released an updated substitute of the 9/11 bill (H.R. 847).  A CBO cost estimate is available here.

The health title remains unchanged from the House-passed bill; the changes in the most recent draft are a reduction in the amount of new money placed into the 9/11 Victim Compensation Fund (to reflect recent class action settlements) and changes to the pay-fors.  The changes are summarized below, and the full bill summary follows.

Changes Made in the Gillibrand Substitute

9/11 Victim Compensation Fund:  The substitute reduces the total value of the Victims’ Compensation fund by $1.2 billion dollars to slightly under $3 billion dollars for the first ten years.  This reduces the total amount of federal funds paid for compensation under Title II to $7.18 billion (down from $8.4 billion).  The New York Senators represent that this change was made possible as a result of the settlement reached last month with Ground Zero workers.

Government Procurement Excise Tax:  The substitute imposes a 2% “excise tax” on federal procurement payments (by definition, made pursuant to a contract with the U.S. Government) for the provision of goods or services, if provided by a country not party to the WTO Government Procurement Agreement (GPA) (or, presumably, a US-FTA partner).

This may be problematic under U.S.-WTO obligations. The GPA is a pluri-lateral WTO agreement to which the US is party with more than 40 other WTO Members.  With respect to procurement obligations, the U.S. is free to differentiate its treatment between non-GPA WTO members and U.S. producers.  However, with respect to an excise tax, such differentiation may conflict with the U.S.’s WTO obligations covering internal taxation with respect to the importation of goods.  For example, if the excise tax is not considered to be a law governing procurement, then it may violate the national treatment obligation which requires the U.S. to treat imports in a manner equal to domestic products.  There may be additional arguments raising trade concerns, but this example is illustrative.

The substitute also specifies it “shall be applied in a manner consistent with United States obligations under international agreements.” It is therefore possible that it would not be applied with respect to the procurement of goods from any other WTO member.  Under this scenario, the vast majority of government procurements likely to be affected would be with respect to Iraq and Afghanistan, which are not full members of the WTO.

It is unclear how JCT/CBO is calculating its score.  The score may include revenues which may reflect contracts with suppliers in WTO Member countries that are not signatories to the GPA, which may be WTO inconsistent (and technically not covered since the bill requires consistency with US international obligations) and also apparently uses, for the bulk of the numbers, contracts with suppliers in Afghanistan and Iraq.  Moreover, the scoring assumes that current spending levels in Iraq and Afghanistan will continue for 10 years at current levels.

Extension of Travel Promotion Act Fees:  The substitute extends and re-directs travel promotion fees created earlier this year to fund the 9/11 health programs.   In March 2010, the President signed into law the Travel Promotion Act (Sec. 9 of PL 111-145, the United States Capitol Police Administrative Technical Corrections Act of 2009), which created a nonprofit corporation to market the United States as an international travel destination.  The corporation is partially funded by a $14 assessment on international visitors from nations that have US-visa waiver programs (i.e., visitors from nations that are not required to obtain a visa for temporary travel to the United States), as well as matching funds from the travel and tourism industry.   Of the $14 fee, $10 is funneled into the Travel Promotion Fund created by the Act to cover operating expenses of the nonprofit corporation.  The remaining $4 is redirected to the general fund to cover the costs of administering the Electronic System for Travel Authorization (ESTA) — authorization that all nationals of visa waiver countries must obtain prior to travelling to the United States.  The Travel Promotion Act authorizes the imposition of this tax on foreign travelers through the end of FY 2014.  The 9/11 bill would extend the collection of the $14 fee past the FY 2014 sunset through FY 2021 and, beginning in FY 2015, redirect all the revenue from the fee into general fund where it can be used to offset health care costs in the 9/11 bill.

H1-B Visa Fees:  The bill extends until September 30, 2021 (from September 30, 2014) the Emergency Border Security Appropriations Act of 2010, passed in August, which raised fees on H1-B and L-1 visas for those companies that have more than half their U.S.-based employees on such visas.

FULL SUMMARY

H.R. 847 would amend the Public Health Service Act to establish new federal programs for 9/11 workers related to health monitoring and treatments, and expand eligibility for the 9/11 victim compensation fund.  Specific details of the legislation include the following:

World Trade Center Health Program:  The bill would establish within the Department of Health and Human Services a new program to provide medical monitoring, screening, and treatment to workers (including federal employees) who responded to the 9/11 attacks on the World Trade Center (WTC), and residents of New York City “who were directly impacted and adversely affected by such attacks.”  The program is intended to provide:

  • Medical monitoring for those exposed to airborne toxins or other hazards;
  • Screening for community members;
  • Treatment for “all medically necessary health and mental health care expenses (including necessary prescription drugs)” for both responders and community members;
  • Outreach to potentially eligible individuals to inform them of benefits available;
  • Uniform data collection and monitoring; and
  • Research on health conditions arising from the World Trade Center attacks.

Specific details of the program include:

Payments:  H.R. 847 provides that all health benefits provided under the program will be provided “without any deductibles, co-payments, or other cost-sharing” by the individual.  (Reimbursement to the program by the City of New York is addressed below.)  The bill provides for the creation of quality control and anti-fraud elements within the new program, and incorporates existing anti-fraud penalties to the WTC program.

Advisory and Steering Committees:  The bill creates a scientific and technical advisory committee to provide expertise on eligibility criteria and WTC-related health conditions, and two steering committees—one for WTC responders, the other for survivors—to co-ordinate the screening and treatment of eligible members.

Outreach:  The bill includes language requiring the Program Administrator to establish a website, create partnerships with local agencies, and take other measures necessary to inform potentially eligible beneficiaries of the existence of the WTC program.

Centers of Excellence:  The bill directs the Administrator to enter into contracts with Centers of Excellence with respect to monitoring, treating, and counseling individuals related to WTC-related health conditions.  Centers of Excellence include those facilities designated by the Administrator that have experience in treating WTC responders and survivors and meet other specified requirements.  The bill would reimburse Centers of Excellence “at a fair and appropriate” negotiated rate for their fixed infrastructure costs; payments for patients’ treatments would be made as outlined below.

Eligibility for Responders Program:  H.R. 847 includes several categories of 9/11-related responders eligible for the new federal health care program, provided they meet eligibility requirements and have a WTC-related health condition.  The bill would expand eligibility for the new program to persons who “performed rescue, recovery, demolition, debris cleanup, or other related services in the New York City disaster area” and meet certain criteria with respect to airborne toxins (persons categorized as meeting “modified criteria”).  H.R. 847 also specifies categories of currently eligible individuals in line to receive treatment covered by the program, including:

  • New York City Fire Department employees, and retirees, who “participated at least one day in the rescue and recovery effort at any of the former World Trade sites (including Ground Zero, Staten Island landfill, and the New York City Chief Medical Examiner’s office)” at any point between September 11, 2001 and July 31, 2002;
  • Surviving immediate family members of New York City firefighters, and retired firefighters, killed on September 11 at the World Trade Center who received mental health treatment related to their loss before September 1, 2008—but such individuals are only subject to reimbursement for mental health treatments;
  • Participants in the WTC cleanup efforts in Lower Manhattan (defined as areas south of Canal Street), the Staten Island landfill, or the barge loading piers who worked:
    • At least 4 hours between September 11 and September 14, 2001;
    • At least 24 hours between September 11 and September 30, 2001; or
    • At least 80 hours between September 11, 2001, and July 31, 2002;
  • New York City and Port Authority police, and retirees, who worked:
    • At least 4 hours between September 11 and September 14, 2001 in Lower Manhattan, the Staten Island landfill, or the barge loading piers;
    • At least 24 hours between September 11 and September 30, 2001 in Lower Manhattan;
    • At least 80 hours between September 11, 2001, and July 31, 2002 in Lower Manhattan; or
    • One day at Ground Zero, the Staten Island landfill, or the barge loading piers (but not Lower Manhattan as a whole) between September 11, 2001, and July 31, 2002;
  • Workers in the New York City Medical Examiner’s office between September 11, 2001 and July 31, 2002;
  • Workers in the Port Authority Trans-Hudson Corporation tunnel who worked at least 24 hours between February 1, 2002, and July 1, 2002; and
  • Vehicle maintenance workers exposed to debris for one day between September 11, 2001 and July 31, 2002.

The bill also extends eligibility to those fire and police workers and other volunteers who participated in cleanup efforts at the Pentagon or in Shanksville, PA in the days following the September 11 attacks.  The bill includes provisions for an application process lasting no more than 60 days, and an appeal in cases where applications are initially denied.

The bill limits the number of beneficiaries to a maximum of 25,000 who at any time qualify for the program, with no more than 2,500 meeting “modified criteria,” but exempts from the numerical cap those beneficiaries already receiving treatment for an identified WTC-related condition at the time of the bill’s enactment.

Expected Eligibility and Participation:  According to a Congressional Budget Office score of an earlier version of H.R. 847 released in June:

CBO estimates that roughly 650,000 individuals from the NYC disaster area—approximately 75,000 responders and 575,000 survivors—would meet the exposure requirements specified in the legislation, along with potentially another 10,000 responders from the Pentagon and Shanksville, Pennsylvania, sites.  Although many of those individuals may have or develop health conditions related to the terrorist attacks, CBO estimates that only a portion would participate in the WTC Health Program and apply for an award under the VCF [Victim Compensation Fund].  Overall, CBO expects that of the total population that meets the exposure requirements, slightly less than 15 percent [about 99,000 individuals] would enroll in the WTC Health Program by 2020 and slightly more than 5 percent [about 33,000 individuals] would receive awards from the VCF.

Conditions Eligible for Treatment:  The bill defines a WTC-related health condition as “an illness or health condition for which exposure to airborne toxins, any other hazard, or any other adverse condition resulting from the September 11, 2001 attacks on the World Trade Center…is substantially likely to be a significant factor in aggravating, contributing to, or causing the illness or health condition,” or a mental health condition for which the attacks are “substantially likely to be a significant factor in aggravating, contributing to, or causing the condition.”  The bill includes a list of aerodigestive (i.e., asthma and other pulmonary conditions), musculoskeletal, and mental health diseases (including post-traumatic stress disorder) that qualify for treatment.

H.R. 847 also includes an application process to add additional illnesses subject to review by the Administrator and the Advisory Committees, and permits physicians at Centers of Excellence to receive federal payments for treatments for WTC-related diseases not yet identified as such under the provisions above, subject to a subsequent determination by the Administrator as to whether or not the condition will be added to the eligible list of diseases.

Standards for Treatment:  The bill limits treatments paid for by the federal government to medically necessary standards, subject to protocols developed by the Administrator.  The bill includes provisions for an appeals process with respect to medical necessity determinations.

Payment Levels:  H.R. 847 provides that payments to physicians and other medical providers would generally be based upon reimbursement levels under the Federal Employees Compensation Act (FECA), which governs federal workers compensation claims.  The bill also includes language establishing a competitive bidding process among vendors to govern pharmaceutical purchases by eligible beneficiaries, and permits the Administrator to designate reimbursement rates for other services not referenced in the bill language.

Eligibility for Survivors:  H.R. 847 creates a separate program for various segments of the community affected by the World Trade Center attacks.  Eligible groups of individuals include:

  • “A person who was present in the New York City disaster area [defined as any area in Manhattan south of Houston Street and any block in Brooklyn within a 1.5 mile radius of the WTC site] in the dust or dust cloud on September 11, 2001;”
  • Individuals who “worked, resided, or attended school, child care, or adult day care in the New York City disaster area” for at least four days between September 11, 2001 and January 10, 2002—or at least 30 days between September 11, 2001 and July 31, 2002;
  • “Any person who worked as a clean-up worker or performed maintenance work in the New York City disaster area” between September 11, 2001 and January 10, 2002 “and had extensive exposure to WTC dust as a result of such work;”
  • Individuals residing or having a place of employment in the New York City disaster area between September 11, 2001 and May 31, 2003, and deemed eligible to receive grants from the Lower Manhattan Development Corporation;
  • Any individuals receiving treatment at the World Trade Center Environmental Health Center as of the date of the bill’s enactment; or
  • Additional individuals who claim a WTC-related health condition, as determined by the Administrator in consultation with the WTC committees.

The bill includes an application and certification process for community beneficiaries similar to that for responder beneficiaries discussed above.  The bill limits the number of beneficiaries to a maximum of 25,000 who at any time qualify for the program, of which no more than 2,500 may be individuals enrolled based on modified eligibility criteria, but exempts from the numerical cap those beneficiaries already receiving treatment for an identified WTC-related condition at the time of the bill’s enactment.

Beneficiaries under the community-based program would generally receive the same benefits and treatments as the WTC responders, except that the community-based program does not include musculoskeletal disorders in the list of identified health conditions (although some or all of these could be added under the process described above).

Treatment for Other Individuals:  H.R. 847 establishes an additional capped fund to finance care for those living in the New York disaster area at the time of the September 11 attacks, but not meeting the criteria listed above, who have been diagnosed with an identified WTC-related health condition.  The bill caps such spending at $20 million in Fiscal Year 2012, rising annually according to medical inflation rates.

Care Outside New York:  The bill would require the Administrator to “establish a nationwide network of health care providers” to treat eligible recipients outside the New York City metropolitan area, subject to certain reporting and quality requirements.

Research:  The bill would require the WTC Administrator to establish an epidemiological research program on health conditions arising from the World Trade Center attacks.  The program would cover diagnosis and treatment of WTC-related health conditions among responders and in sample populations from Lower Manhattan and Brooklyn, “to identify potential for long-term adverse health effects in less exposed populations.”

Payers:  In cases where an individual is eligible for workman’s compensation, or holds other private or public health insurance coverage, the bill provides that the federal government’s WTC program shall serve as a secondary payer for such claims, similar to the Medicare Secondary Payer program, except that the WTC program would serve as the primary payer for those eligible for Medicare.  Beginning in July 2014, the bill requires individuals to maintain health insurance, as required by the Patient Protection and Affordable Care Act’s individual mandate, in order to qualify for participation in the program.

The bill stipulates that “no funds may be disbursed” unless New York City has entered into a contract to pay for 10 percent of the expenditures necessary to carry out the title in Fiscal Years 2012 through 2018, and a specified similar amount for Fiscal Years 2019 and 2020, amounts that cannot be derived from any federal sources.

Funding:  The bill creates a fund to finance the programs established above, and provides a total of $3.35 billion in direct appropriations for Fiscal Years 2011-2019.  The bill provides up to an additional $1.1 billion in direct spending for Fiscal Years 2019 and 2020, provided that prior years’ spending did not reach the $3.35 billion cap, and that the cap is not exceeded through Fiscal Year 2020.  However, in its score of H.R. 847, the Congressional Budget Office said it “expects that the cap will be reached in 2019 and estimates that no additional health program spending would occur in 2020.”

Changes to September 11 Compensation Fund:  In addition to establishing the new programs established above, H.R. 847 would also make several changes to the September 11 victim compensation fund established in 2001 (Title IV of P.L. 107-42), as listed below.

Extension for Applications:  H.R. 847 would reopen applications to the September 11 compensation fund in cases where the Special Master for the compensation fund determines that the individual became aware of physical injuries suffered as a result of the September 11 attacks after applications to the compensation fund were closed.  The bill would generally reopen applications for the reasons stated above (and for individuals subject to the expanded eligibility provisions noted below) for two years after the individual knew, or should have known, of such injuries, provided the individual seeks treatment in a prompt manner and the claim can be verified.  Additional claims applications under this extension would be accepted through December 22, 2031.

Expansion of Eligibility Definitions:  The bill would modify the definition of eligibility for compensation to define the “immediate aftermath” of the September 11 attacks as including time through August 30, 2002.  The bill would also expand eligibility to include workers handling debris from the World Trade Center, including “any area contiguous to a site of [the 9/11] crashes that the Special Master determines was sufficiently close to the site that there was a demonstrable risk of physical harm” and “any area related to, or along, routes of debris removal,” including (but not limited to) the Fresh Kills landfill in Staten Island.

Applicability to Pending Lawsuits:  H.R. 847 would require debris workers or other individuals with pending legal claims relating to 9/11-related injuries, and wishing to seek compensation from the victim compensation fund, to withdraw those legal actions within 90 days after updated regulations regarding the fund application extension are promulgated.  The bill would permit individuals whose applications are denied by the Special Master subsequently to reinstitute their legal claims without prejudice within 90 days of the ineligibility determination—a right not granted to fund applications under the original 9/11 victims compensation program.

Limited Liability:  H.R. 847 limits the liability for construction and related contractors regarding workers’ claims to the sum of the funds available in the WTC Captive Insurance Company, an amount not exceeding $350 million from New York City, and the amount of all available insurance held by the Port Authority of New York and New Jersey and the relevant contractors and sub-contractors.

Funding:  The bill caps federal funding for new claims on the 9/11 compensation fund at $7.18 billion—just under $3 billion for the first ten year period following enactment, and $4.2 billion for the second ten year period.  The bill allows the Special Master to “ratably reduce” compensation payments over each ten year period such that all eligible individuals would receive payments during the first ten years, with the remaining balance provided during the second ten year period.

Attorneys Fees:  The bill caps attorneys fees at 10 percent of the award amount, subject to several exceptions.  The bill provides that “with respect to a claim made on behalf of an individual for whom a lawsuit was filed in the Southern District of New York prior to January 1, 2009, in the event that the representative believes in good faith that the limit [on fees]…will not provide adequate compensation for services rendered,” that representative may appeal to the Special Master for a higher fee award.

Additional Background on 9/11 Compensation Fund:  As noted above, Title IV of Public Law 107-42 authorized payments by the federal government to individuals injured or killed as a result of the September 11 attacks; eligible individuals (victims injured and families of individuals killed in the attacks) received $7 billion in payments before the fund closed in 2004.  Justice Department statistics note that during its operation, the fund issued award letters to 5,562 families whose relatives were killed in the September 11 attacks, and to 2,682 claimants suffering personal injuries as a result of the attacks.

While the process created under the law, and administered by Special Master Kenneth Feinberg, was praised by many victims’ families, Members of Congress, and outside experts as fair and judicious, proponents of H.R. 847 assert that first responders who worked at the World Trade Center site have incurred respiratory and other injuries as a result of the toxins inhaled at Ground Zero—but that these conditions only became manifest after the application period provided for in P.L. 107-42 expired.  Title II of H.R. 847 would therefore seek to reopen the compensation fund to allow these workers, and other individuals, to make claims for compensation.

However, asked by House Judiciary Committee Republican staff in 2008 to comment on a proposed draft of Title II in an earlier version of the legislation considered during the 110th Congress, former Special Master Feinberg responded with an e-mail noting several concerns with the approach taken by the bill sponsors and the majority.  These concerns included:

  • An extension of the eligibility definition of “immediate aftermath” from the first four days following September 11 (as prescribed in regulations creating the compensation fund) to August 30, 2002— which could result in “a huge influx of additional claims” and could cause some individuals to re-apply for compensation;
  • Language that “vastly extends [the fund’s] geographic scope,” potentially leading to “thousands and thousands of additional claimants” and causing additional individuals to re-apply for compensation;
  • An extension of the filing period until 2031—“no latent claims need such an extended date;”
  • Provisions requiring the Special Master to determine when an individual first knew or should have known about their injuries—“how can the Special Master possibly make that determination?” and
  • Language permitting individuals denied eligibility for compensation to return to the tort system and re-file their claims—a right which was specifically denied as a pre-condition for initial applicants of the 9/11 fund, but which some who were denied compensation by the Special Master may now attempt to exercise.

House Judiciary Committee Republican staff notes that, to the extent the 9/11 compensation fund is re-opened, Mr. Feinberg recommends that it be done solely to allow first responders with diseases not manifest at the time of the initial application period to receive compensation—language narrower in scope than the provisions discussed above.

Government Procurement Excise Tax:  The bill imposes a 2% “excise tax” on federal procurement payments (by definition, made pursuant to a contract with the U.S. Government) for the provision of goods or services, if provided by a country not party to the WTO Government Procurement Agreement (GPA) (or, presumably, a US-FTA partner).

This provision may be problematic under U.S.-WTO obligations.  The GPA is a pluri-lateral WTO agreement to which the US is party with more than 40 other WTO Members.  With respect to procurement obligations, the U.S. is free to differentiate its treatment between GPA and non-GPA WTO members.  However, with respect to an excise tax, such differentiation may conflict with the U.S.’s WTO obligations covering internal taxation with respect to the importation of goods.  For example, the most-favored nation (MFN) obligation requires the U.S. to treat all other WTO members equally.  So, if the excise tax is not applied to GPA members it could be found WTO inconsistent in the event non-GPA signatory WTO members (for example, China) are made subject to the excise tax.  There may be additional arguments raising trade concerns, but this example is illustrative.

The bill also specifies it “shall be applied in a manner consistent with United States obligations under international agreements.”  It is therefore possible that it would not be applied with respect to the procurement of goods from any other WTO member.  Under this scenario, the vast majority of government procurements likely to be affected would be with respect to Iraq and Afghanistan, which are not full members of the WTO.

Extension of Travel Promotion Act Fees:  The bill extends and re-directs travel promotion fees created earlier this year.   In March 2010, the President signed into law the Travel Promotion Act (Sec. 9 of PL 111-145, the United States Capitol Police Administrative Technical Corrections Act of 2009), which created a nonprofit corporation to market the United States as an international travel destination.  The corporation is partially funded by a $14 assessment on international visitors from nations that have US-visa waiver programs (i.e., visitors from nations that are not required to obtain a visa for temporary travel to the United States), as well as matching funds from the travel and tourism industry.   Of the $14 fee, $10 is funneled into the Travel Promotion Fund created by the Act to cover operating expenses of the nonprofit corporation.  The remaining $4 is redirected to the general fund to cover the costs of administering the Electronic System for Travel Authorization (ESTA) — authorization that all nationals of visa waiver countries must obtain prior to travelling to the United States.  The Travel Promotion Act authorizes the imposition of this tax on foreign travelers through the end of FY 2014.  The 9/11 bill would extend the collection of the $14 fee past the FY 2014 sunset through FY 2021 and, beginning in FY 2015, redirect all the revenue from the fee into general fund where it can be used to offset health care costs in the 9/11 bill.

H1-B Visa Fees:  The bill extends until September 30, 2021 (from September 30, 2014) the Emergency Border Security Appropriations Act of 2010, passed in August, which raised fees on H1-B and L-1 visas for those companies that have more than half their U.S.-based employees on such visas.