Tag Archives: Louisiana Purchase

A Reading Guide to the Senate Bill’s Backroom Deals

Buried within the pages of the revised Senate health-care bill are numerous formula tweaks meant to advantage certain states. Call them backroom deals, call them earmarks, call them whatever you like: several provisions were inserted into the bill over the past two weeks with the intent of appealing to certain constituents.

It appears that at least three of these provisions apply to Alaska—home of wavering Sen. Lisa Murkowski (R-AK)—and another applies to Louisiana, home of undecided Sen. Bill Cassidy (R-LA). Below please find a summary (not necessarily exhaustive) of these targeted provisions.

The Buy Off Lisa Murkowski Again Fund

Section 106 of the bill includes new language—page 13, lines 4 through 13, and page 18, line 12 through page 19, line 4—dedicating one percent of the new Stability Fund dollars to “each state where the cost of insurance premiums are at least 75 percent higher than the national average.” As a Bloomberg story noted, this provision currently applies only to Alaska, and could result in $1.32 billion in Stability Fund dollars automatically being directed to Alaska.

The Alaskan Pipeline

The revised Section 126 of the bill includes modified language—page 44, lines 9 through 17—changing certain Medicaid payments to hospitals based on a state’s overall uninsured population, not its Medicaid enrollment. As Bloomberg noted, this provision would also benefit Alaska, because Alaska recently expanded its Medicaid program, and therefore would qualify for fewer dollars under the formula in the original base bill.

The Moral Hazard Expansion

The underlying bill determined Medicaid per capita caps based on eight consecutive fiscal quarters—i.e., two years—of Medicaid spending. However, the revised bill includes language beginning on line 6 of page 59 that would allow “late expanding Medicaid states”—defined as those who expanded between and July 1, 2015 and September 30, 2016—to base their spending on only four consecutive quarters. Relevant states who qualify under this definition include Alaska (expanded effective September 1, 2015), Montana (expanded effective January 1, 2016), and Louisiana (expanded effective July 1, 2016).

The most recent actuarial report on Medicaid noted that, while the actuary originally predicted that adults in the expansion population would cost less than existing populations, in reality each newly eligible enrollee cost 13.6 percent more than existing populations in 2016. Some states have used the 100 percent federal match for their expansion populations—i.e., “free money from Washington”—to raise provider reimbursement levels. Therefore, allowing these three states to use only the quarters under which they had expanded Medicaid as their “base period” will likely allow them to draw down higher payments from Washington in perpetuity.

The South Dakota Purchase

The revised bill includes a new Section 138, which makes services provided by a state to Indian Health Service enrollees subject to a 100 percent federal Medicaid match. Under current law, only services “received through an Indian Health Service facility whether operated by the Indian Health Service or by an Indian tribe or tribal organization” are subject to a 100 percent match. South Dakota Gov. Dennis Daugaard has pushed this provision for over a year, saying he would expand Medicaid under Obamacare—but only if the federal government would agree to provide a 100 percent reimbursement for all Medicaid services provided to Indian Health Service enrollees.

The Buffalo Bribe

This provision, originally included in the House-passed bill, remains in the Senate version, beginning at line 12 of page 69. Originally dubbed the “Buffalo Bribe,” and inserted at the behest of congressmen from upstate New York, the provision would essentially penalize that state if it continues to require counties to contribute to the Medicaid program’s costs.

More to Come?

While the current bill contains at least half a dozen targeted provisions, many more could be on the way. By removing repeal of the net investment tax and Medicare “high-income” tax, the bill retains over $230 billion in revenue. Yet the revised bill spends far less than that—$70 billion more for the Stability Fund, $43 billion more in opioid funding, and a new $8 billion demonstration project for home and community-based services in Medicaid.

Even after the added revenue loss from additional health savings account incentives, Senate leadership could have roughly $100 billion more to spend in their revised bill draft—which of course they will. Recall too that the original Senate bill allowed for nearly $200 billion in “candy” to distribute to persuade wayward lawmakers. In both number and dollar amount, the number of “deals” to date may dwarf what’s to come.

This post was originally published in The Federalist.

Former Obama Administration Officials Now Making Money Off Obamacare

After examining the harmful impacts of Obamacare on so many segments of the population—seniorsdoctors, and future generations—we’ve finally found one constituency for whom the unpopular law has proved an unmitigated boon: high-priced lobbyists.

The Hill reports on how dozens of former staffers who wrote and implemented the law are now “cashing in,” trading their expertise for big bucks:

ObamaCare has become big business for an elite network of Washington lobbyists and consultants who helped shape the law from the inside. More than 30 former administration officials, lawmakers and congressional staffers who worked on the healthcare law have set up shop on K Street since 2010….

“When [Vice President] Biden leaned over [during healthcare signing] and said to [President] Obama, ‘This is a big f’n deal,’” said Ivan Adler, a headhunter at the McCormick Group, “he was right.”

As the article notes, these high-priced lobbying firms and their clients are searching for “expert help,” both to understand the law—we did have to pass the bill to find out what’s in it, remember—and to lobby bureaucrats into making regulatory changes. Hence “widespread complaints from businesses and their lobbyists” led to a delay in the employer mandate.

And it’s not just big businesses and their K Street lobbyists receiving special treatment under Obamacare. Unions received their waivers—although they’re now lobbying for yet another exemption from the law. Congress recently got in on the act, lobbying behind closed doors for its own illegal relief, to keep taxpayer-funded health insurance subsidies going to Members of Congress and their staffs.

This is the type of behavior—shady backroom deals like the “Louisiana Purchase” and the “Cornhusker Kickback”—that helped make Obamacare so unpopular when Congress rammed it through more than three years ago.

There’s one easy way to put a stop to this unfair, unworkable, and unpopular law: Congress should embrace the opportunity to defund Obamacare now.

This post was originally published at the Daily Signal.

Big Hospitals’ Obamacare Deal Betrays Seniors and the Poor

backroom deal made during the writing of Obamacare will harm seniors and the poor, according to The Wall Street Journal (WSJ).

During their closed-room dealings with the Obama Administration, the hospital industry’s lobbyists agreed to support Obamacare—provided that the law placed restrictions on physician-owned “specialty” hospitals, noted WSJ. These innovative specialty hospitals frequently have quality outcomes better than most traditional facilities, but no matter—the big hospital lobbyists wanted to eliminate a source of competition. So Obamacare prohibits new physician-owned hospitals from receiving Medicare payments — and prohibits most existing facilities from expanding if they wish to keep treating Medicare patients.

WSJ highlighted the actions specialty hospitals have been forced to take in response to these Obamacare restrictions:

Forest Park Medical Center in Dallas has stopped accepting Medicare patients, allowing it to escape the law’s restrictions entirely…. Rejecting Medicare ‘was a big leap, but we felt like the law gave us no choice,’ said J. Robert Wyatt, a Forest Park founder….

Other doctor-owned facilities are asking the federal government to let them duck the law’s restrictions altogether. Doctors Hospital at Renaissance near McAllen, Texas, is trying to get a waiver allowing it to expand as more than 53% of its payments come through the Medicaid federal-state insurance program for the poor.

In other words, because hospital lobbyists cut a backroom deal to support Obamacare, seniors and low-income patients have fewer health care options. Think that these examples of Americans losing access to care would prompt the hospital-industrial complex to reconsider its backroom deal? Not a chance:

Any effort to undo the expansion limits faces an uphill battle with Democrats, because the restrictions were a deal-breaker for hospitals when the White House sought their support for the law in 2009, industry lobbyists say.

Obamacare’s backroom deals (the “Louisiana Purchase,” the “Gator Aid,” and the “Cornhusker Kickback”) represented the worst in politics—well-heeled lobbyists seeking to obtain government largesse through pork-barrel spending and regulatory loopholes. The Wall Street Journal story reminds us how those backroom deals have real-world consequences when it comes to medical access—another example of how Obamacare has harmed patient care.

This post was originally published at the Daily Signal.

Policy Brief: Two Years Later, Obamacare Fails Patients, Doctors, and Taxpayers

Two years ago, House Speaker Nancy Pelosi famously said Congress had to pass President Obama’s health care bill to find out what is in it. Now, we know what’s in this law and how it clearly breaks the President’s promises to the American people.

Broken Promise #1: “If you like your plan, you can keep it”

  • Candidate Obama promised “[y]ou will not have to change plans. For those who have insurance now, nothing will change under the Obama plan – except that you will pay less.”
  • By the Administration’s own estimates, new health care regulations will force most firms – and up to 80 percent of small businesses – to give up their current plans by 2013. Grandfathered plans would then be subject to the costly new mandates and increased premiums under the president’s health care plan.
  • Seniors will lose access to Medicare Advantage plans. One study found that Medicare Advantage enrollment will be cut in half by 2017, and plan choices will be reduced by two-thirds. Democrats realized seniors will lose plan access, so they created a temporary, multi-billion dollar waiver program for Medicare Advantage plans. Under this program, seniors will not lose their existing coverage until 2013 — after President Obama’s re-election campaign.

Broken Promise #2: “I will protect Medicare”

  • In his 2009 address to Congress, President Obama promised, “I will protect Medicare.”
  • The president’s health care law, however, takes more than $500 billion from Medicare and uses the money to pay for the new entitlements. The Medicare actuary has written that the Medicare cuts “cannot be simultaneously used to finance other Federal outlays (such as the coverage expansions) and to extend the [Medicare] trust fund.”
  • The Congressional Budget Office wrote Medicare provisions in the president’s health care plan “would not enhance the ability of the government to pay for future Medicare benefits.” President Obama admitted in an interview, “You can’t say that you are saving on Medicare and then spend the money twice.” But that is exactly what the law does – it spends the same money twice, undermining Medicare rather than protecting it.

Broken Promise #3: Will “lower your premiums by $2500 per family per year”

  • Candidate Obama said his bill would cut premiums by an average of $2,500 per family. His campaign also promised those reductions would happen within President Obama’s first term.
  • The annual Kaiser Family Foundation survey of employer-provided insurance found that average family premiums totaled $12,860 in 2008, $13,375 in 2009, $13,770 in 2010, and $15,073 in 2011. Premiums already have risen by $2,213 since President Obama took office.
  • CBO projects the law’s new benefit mandates will raise premiums in the individual market by $2,100 per family. The increase is because people will be forced to buy richer coverage, which will encourage them to consume more health care.

Broken Promise #4:  Will not add “one dime to our deficits”

  • President Obama promised “I will not sign a [health care] plan that adds one dime to our deficits — either now or in the future.”
  • However, an honest accounting of the health care law finds that it will increase the deficit by hundreds of billions in its first 10 years alone (FY 2010-19).
  • For instance, the law double counts $398 billion in Medicare savings, used both to extend the life of the Medicare trust fund to pay for new entitlements. The CBO stated that if these Medicare savings were set aside for Medicare, the law would raise the deficit.
  • Former CBO Director Douglas Holtz-Eakin has written that under a realistic set of assumptions, the law will increase the deficit by at least $500 billion in its first 10 years and more than $1.5 trillion in its second decade (FY 2020-29).

Broken Promise #5: No need for a “mandate”

  • Candidate Obama opposed a mandate to buy insurance, and made it one of the hallmarks of his primary campaign against then-Senator Clinton. Obama said that fining people for not buying health insurance was like “solv[ing] homelessness by mandating everybody buy a house.”
  • President Obama’s health care law created an unprecedented federal requirement for all citizens to purchase a product merely because they exist.
  • The mandate has been struck down by one appeals court and will be considered by the Supreme Court of the United States later this month.

Broken Promise #6:  Will not raise “any of your taxes”

  • Candidate Obama pledged he would not raise “any of your taxes” and promised not to tax health benefits. His health care law broke those promises at least 10 times.
    • $52 billion in fines on employers who do not provide “government-approved” coverage;
    • $32 billion in taxes on health insurance plans;
    • $5 billion in taxes from limits on over-the-counter medication;
    • $15 billion in taxes from limiting the deduction on itemized medical expenses;
    • $13 billion in taxes from new limits on Flexible Spending Arrangements
    • $60 billion in taxes on health insurance plans;
    • $27 billion in taxes on pharmaceutical companies;
    • $20 billion in taxes on medical device companies;
    • $3 billion in taxes on tanning services;
    • $3 billion in taxes on self-insured health plans; and
    • $1 billion in new penalties on Health Savings Account distributions.
    • The health care law includes a “high-income” tax that, because it is not indexed for inflation, will eventually hit 80 percent of taxpayers, according to the Medicare actuary.
    • The law forces people to buy insurance, then the federal government taxes employer-provided plans at a 40 percent rate. This tax will hit middle-income families especially hard.

Broken Promise #7: “It’s going to have to control costs”

  • President Obama promised that health care legislation must control costs: “If any bill arrives from Congress that is not controlling costs, that’s not a bill I can support. It’s going to have to control costs.”
  • According to the Medicare actuary, national health spending will go up by at least $311 billion over 10 years under the president’s health care plan.
  • The Medicare actuary believes that payment reductions to hospitals and other providers as part of the law could cause as many as 40 percent of Medicare providers to become unprofitable. These cuts would lead to beneficiary access problems. If the experts’ predictions are accurate, the cuts would need to be reversed, and spending on health care would increase beyond the $311 billion currently projected by the actuary.

Broken Promise #8:  “Will cost between $50-65 billion a year when fully phased in

  • Candidate Obama pledged his health care plan would cost “$50-65 billion a year when fully phased in.”
  • CBO now projects the cost of coverage expansions will be $229 billion in 2020 and $245 billion in 2021, four times what candidate Obama promised. CBO conceded that “putting the federal budget on a sustainable path would almost certainly require a significant reduction in the growth of federal health spending relative to current law (including [the health care law]).”
  • CBO Director Elmendorf said higher-than-expected unemployment levels will raise federal spending on subsidies in the president’s health care plan. This means projections could significantly underestimate the level of spending on the new entitlements.

Broken Promise #9: “Four million small businesses may be eligible for tax credits”

  • President Obama claimed that “4 million small businesses may be eligible for tax credits” included in the law. The IRS spent nearly $1 million in taxpayer money to pay for four million postcards promoting the tax credit.
  • The Treasury Department’s Inspector General recently testified that “the volume of credit claims has been lower than expected.” Only 309,000 firms have received the credit – seven percent of the four million firms the Administration claimed.
  • Republicans pointed out more than a year ago that this credit was too complex to be of much assistance to small businesses. The Treasury Inspector General noted that “there are multiple steps to calculate the Credit, and seven worksheets must be completed in association with claiming the Credit.”

Broken Promise #10:  “These negotiations will be on C-SPAN”

  • Candidate Obama promised to televise all health care negotiations on C-SPAN. The process that created the president’s health care plan was plagued with backroom deals like the “Cornhusker Kickback,” “Gator-Aid,” and the “Louisiana Purchase.”
  • The president conceded the process “legitimately raised concerns not just among my opponents, but also amongst supporters that we just don’t know what’s going on. And it’s an ugly process and it looks like there are a bunch of backroom deals.”
  • Democrats drafted the final legislation entirely in secret and passed it on party-line votes in both houses of Congress. President Obama noted that “sometimes it’s messy, the process is frustrating,” but he did not admit failure on transparency.

Time after time, President Obama made promises his health care law did not keep. It is time to replace President Obama’s failed experiment and provide real reform that guarantees people the care they need, from the doctor they want, at a price they can afford.

208 Things in Obamacare That Democrats Support

Last week, former HELP Committee staffer John McDonough wrote a list of “50 provisions I ask the media to ask Romney et al. if they are committed to repealing as President.”  McDonough noted that “there are [Obamacare] provisions opponents could pick out to create an alternative list for elimination.”

We know a challenge when we hear one; our list is submitted below, with sections from the statute duly noted.  Remember when reading this list:  We KNOW that President Obama and Democrats all support these provisions in Obamacare – because they all voted to enact them into law.  So members of the media can readily ask President Obama and Democrat Members of Congress why they supported a law that…

  1. Imposes $800 billion in tax increases, including no fewer than 12 separate provisions breaking candidate Obama’s “firm pledge” during his campaign that he would not raise “any of your taxes” (Sections 9001-9016)?
  2. Forces Americans to purchase a product for the first time ever (Section 1501)?
  3. Creates a board of 15 unelected and unaccountable bureaucrats to make binding rulings on how to reduce Medicare spending (Section 3403)?
  4. Pays over $800 billion in subsidies straight to health insurance companies (Sections 1401, 1402, and 1412)?
  5. Requires all individuals to buy government-approved health insurance plans, imposing new mandates that will raise individual insurance premiums by an average of $2,100 per family (Section 1302)?
  6. Forces seniors to lose their current health care, by enacting Medicare Advantage cuts that by 2017 will cut enrollment in half, and cut plan choices by two-thirds (Section 3201)?
  7. Imposes a 40 percent tax on health benefits, a direct contradiction of Barack Obama’s campaign promises (Section 9001)?
  8. Relies upon government bureaucrats to “issue guidance on best practices of plain language writing” (Section 1311(e)(3)(B))?
  9. Provides special benefits to residents of Libby, Montana – home of Max Baucus, the powerful Chairman of the Senate Finance Committee, who helped write the law even though he says he hasn’t read it (Section 10323)?
  10. Imposes what a Democrat Governor called the “mother of all unfunded mandates” – new, Washington-dictated requirements of at least $118 billion – at a time when states already face budget deficits totaling a collective $175 billion (Section 2001)?
  11. Imposes reductions in Medicare spending that, according to the program’s non-partisan actuary, would cause 40 percent of all Medicare providers to become unprofitable, and could lead to their exit from the program (Section 3401)?
  12. Raises premiums on more than 17 million seniors participating in Medicare Part D, so that Big Pharma can benefit from its “rock-solid deal” struck behind closed doors with President Obama and Congressional Democrats (Section 3301)?
  13. Creates an institute to undertake research that, according to one draft Committee report prepared by Democrats, could mean that “more expensive [treatments] will no longer be prescribed” (Section 6301)?
  14. Creates a multi-billion dollar “slush fund” doled out solely by federal bureaucrats, which has already been used to fund things like bike paths (Section 4002)?
  15. Subjects states to myriad new lawsuits, by forcing them to assume legal liability for delivering services to Medicaid patients for the first time in that program’s history (Section 2304)?
  16. Permits taxpayer dollars to flow to health plans that fund abortion, in a sharp deviation from prior practice under Democrat and Republican Administrations (Section 1303)?
  17. Empowers bureaucrats on a board that has ruled against mammograms and against prostate cancer screenings to make binding determinations about what types of preventive services should be covered (Sections 2713 and 4104)?
  18. Precludes poor individuals from having a choice of health care plans by automatically dumping them in the Medicaid program (Section 1413(a))?
  19. Creates a new entitlement program that one Democrat called “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of” – a scheme so unsustainable even the Administration was forced to admit it would not work (Section 8002)?
  20. Provides $5 billion in taxpayer dollars to a fund that has largely served to bail out unions and other organizations who made unsustainable health care promises to retirees that they cannot afford (Section 1102)?
  21. Creates a tax credit so convoluted it requires seven different worksheets to determine eligibility (Section 1421)?
  22. Imposes multiple penalties on those who marry, by reducing subsidies (and increasing taxes) for married couples when compared to two individuals cohabiting together (Sections 1401-02)?
  23. Extends the Medicare “payroll tax” to unearned income for the first time ever, including new taxes on the sale of some homes (Section 1402)?
  24. Impedes state flexibility by requiring Medicaid programs to offer a specific package of benefits, including benefits like family planning services (Sections 2001(a)(2), 2001(c), 1302(b), and 2303(c))?
  25. Requires individuals to go to the doctor and get a prescription in order to spend their own Flexible Spending Account money on over-the-counter medicines (Section 9003)?
  26. Expands the definition of “low-income” to make 63 percent of non-elderly Americans eligible for “low-income” subsidized insurance (Section 1401)?
  27. Imposes a new tax on the makers of goods like pacemakers and hearing aids (Section 9009)?
  28. Creates an insurance reimbursement scheme that could result in the federal government obtaining Americans’ medical records (Section 1343)?
  29. Permits states to make individuals presumptively eligible for Medicaid for unlimited 60-day periods, thus allowing any individual to receive taxpayer-funded assistance ad infinitum (Section 2303(b))?
  30. Allows individuals to purchase insurance on government exchanges – and to receive taxpayer-funded insurance subsidies – WITHOUT verifying their identity as American citizens (Section 1411)?
  31. Gives $300 million in higher Medicaid reimbursements to one state as part of the infamous “Louisiana Purchase” – described by ABC News as “what…it take[s] to get a wavering senator to vote for health care reform” (Section 2006)?
  32. Raises taxes on firms who cannot afford to buy coverage for their workers (Section 1513)?
  33. Forces younger Americans to pay double-digit premium increases so that older workers can pay slightly less (Section 1201)?
  34. Prohibits states from modifying their Medicaid programs to include things like modest anti-fraud protections (Section 2001)?
  35. Includes a special provision increasing federal payments just for Tennessee (Section 1203(b))?
  36. Allows individuals to purchase health insurance across state lines – but only if politicians and bureaucrats agree to allow citizens this privilege (Section 1333)?
  37. Allows the HHS Secretary and federal bureaucrats to grant waivers exempting people from Obamacare’s onerous mandates, over half of which have gone to members of union plans (Section 1001)?
  38. Creates a pseudo-government-run plan overseen by the federal government (Section 1334)?
  39. Removes a demonstration project designed to force government-run Medicare to compete on a level playing field with private plans (Section 1102(f))?
  40. Gives the Secretary of HHS an UNLIMITED amount of federal funds to spend funding state insurance Exchanges (Section 1311(a))?
  41. Creates a grant program that could be used by liberal groups like ACORN or AARP to conduct “public education activities” surrounding Obamacare (Section 1311(i))?
  42. Applies new federal mandates to pre-Obamacare insurance policies, thus proving that you CAN’T keep the insurance plan you had – and liked – before the law passed (Sections 2301 and 10103)?
  43. Prohibits individuals harmed by federal bureaucrats from challenging those decisions, either in court or through regulatory processes (Sections 3001, 3003, 3007, 3008, 3021, 3022, 3025, 3133, 3403, 5501, 6001, AND 6401)?
  44. Earmarks $100 million for “construction of a health care facility,” a “sweetheart deal” inserted by a Democrat Senator trying to win re-election (Section 10502)?
  45. Puts yet another Medicaid unfunded mandate on states, by raising payments to primary care physicians, but only for two years, forcing states to come up with another method of funding this unsustainable promise when federal funding expires (Section 1202)?
  46. Imposes price controls that have had the effect of costing jobs in the short time since they were first implemented (Section 1001)?
  47. Prohibits individuals from spending federal insurance subsidies outside government-approved Exchanges (Section 1401(a))?
  48. Provides a special increase in federal hospital payments just for Hawaii (Section 10201(e)(1))?
  49. Imposes new reporting requirements that will cost businesses millions of dollars, and affect thousands of restaurants and other establishments across the country (Section 4205)?

And instead of including a 50th item on our list, we’re going to include 159 separate items.  These are the 159 new boards, bureaucracies, and programs created by Obamacare.  You can find the list here.

No matter which way you look at it, this list provides 208 easy reasons why the American people still continue to reject Democrats’ unpopular 2700-page health care law.

Health Care and Judicial Activism

Obviously, the Florida court ruling striking down the health care law as unconstitutional leads today’s headlines.  A quick digest of stories from the major press outlets includes those from the AP, the Washington Post, the New York Times, the LA Times, and USA Today.  The Wall Street Journal, in addition to its summary, also has an analysis of the implications of the suit on the commerce clause (and vice versa), as well as an editorial praising the decision.  Politico has a summary, a preview of a potential Supreme Court review of the individual mandate, and a primer on the political implications of the ruling.  CQ speculates on how the ruling might affect implementation, and The Hill discusses Democrats’ options on the individual mandate.

It’s also worth taking some time to examine the ruling itself, given that the White House and others have called it a work of “judicial activism,” specifically because it strikes down the ENTIRE bill, as opposed to just the individual mandate.  While the usual practice of courts is to strike down only the unconstitutional provisions, the Administration has argued in its defense of the law that the individual mandate is “essential” to the other health insurance reforms.  (An October Wall Street Journal piece at the time of the Virginia ruling noted the contradictions inherent in the government’s legal defense – whereby the Administration argued that other portions of the law, like the student loan provisions included in reconciliation, should not be struck down, even at the same time asserting that the mandate is part of a larger health regulatory scheme, and the law cannot stand without the mandate left intact.)  Determining what portions should be stricken requires a test of whether the remaining portions “can function independently” in a manner “consistent with the intent of Congress,” and a review of the statute to determine whether the remaining portions would have been preferable to no law at all. (See the discussion at pages 65-66 of the ruling)

Congress explicitly rejected a severability clause for the enacted version of the law – the House introduced bill (H.R. 3200) and House-passed measure (H.R. 3962) both included severability clauses, but the Senate version that the President sign did not.  The ruling cites prior Supreme Court precedent to conclude that Congress’ decision specifically to omit a severability clause was important, given the questions surrounding constitutionality at the time of the bill’s consideration.  In addition, a textual analysis of both the briefs in the case and other public comments indicates a strong emphasis by advocates of the legislation on the “affordability” provisions of “health insurance reform,” indicating the law’s own advocates consider these provisions the lynchpin of the statute.  (Put another way, how many times have you seen Members making floor speeches about the bone density provisions in Section 3111 of the statute?  While this provision and others may be able to stand without a mandate, they don’t represent the major thrust of the measure, by any stretch.)

When it comes to whether the remaining portions would have been preferable to no law at all, there are some instructive examples to consider:

  • CLASS Act:  This new, unsustainable entitlement specifically failed to obtain a majority vote on the floor of the Senate; 11 Democrats rejected it, including Budget Committee Chairman Kent Conrad, who famously called it “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of.”  This program obviously would not have stood on its own without being linked to the health insurance provisions in the broader bill.
  • Indian Health Service (IHS) Reauthorization:  This 300-page bill was NOT subjected to a separate vote in either the House or the Senate – then-Speaker Pelosi added the measure to the House-passed measure (H.R. 3962) after the standing committees had completed their deliberations, and Majority Leader Reid included the measure as part of a larger manager’s package on the Senate floor.  It’s worth pointing out that Speaker Pelosi had deliberately refused to bring the measure to the House floor for several years, because pro-life Democrats likely had the votes to attach restrictions on abortion funding to the measure.  The last-minute inclusion of the IHS provisions was likely to allow the bill to “piggy-back” on the insurance reform measure – meaning it’s unlikely a stand-alone bill along the lines of the provisions in the statute would have been enacted on its own.
  • Backroom Deals:  Does anyone believe that Congress would have taken time to enact the “Louisiana Purchase,” the “U-CONN” hospital earmark, and all the other special deals in the legislation as stand-alone bills?
  • 1099:  As the ruling pointed out, the 1099 paperwork mandate is one of the stand-alone provisions that clearly has no link to the health insurance provisions (or anything health care related, for that matter).  Yet Democrats and President Obama have called for its repeal.  Should a judge uphold the 1099 provision on the grounds that it’s not related to the insurance regulations and individual mandate, or strike the provision on the grounds that even the bill’s writers have now disclaimed authorship of it?

While only the 1099 provision is specifically referenced in the ruling, it perfectly illustrates why the ruling struck down the entire law – because it requires a judge to attempt to divine Congressional intent.  As the ruling notes at pages 72-73:

“Going through the 2,700-page Act line-by-line, invalidating dozens (or hundreds) of some sections while retaining dozens (or hundreds) of others, would not only take considerable time and extensive briefing, but it would, in the end, be tantamount to rewriting a statute in an attempt to salvage it….Courts should not even attempt to do that. It would be impossible to ascertain on a section-by-section basis if a particular statutory provision could stand (and was intended by Congress to stand) independently of the individual mandate. The interoperative effects of a partial deletion of legislative provisions are often unforseen [sic] and unpredictable. For me to try and “second guess” what Congress would want to keep is almost impossible.”

For these reasons, yesterday’s ruling represents NOT an example of judicial activism, but of judicial modesty – a judge admitting he cannot (and should not) unilaterally attempt to ascertain Congressional intent.

Bloggers like Ezra Klein (the noted constitutional scholar) have argued that striking down the whole law is the work of an “activist in the extreme,” relying on a passage on page 74 of the ruling, where Judge Vinson discusses the “‘normal rule’ rule that reviewing courts should ordinarily refrain from invalidating more than the unconstitutional part of a statute,” and notes that “this [ruling] is not a situation that is likely to be repeated.”  Klein’s comments miss a key point – the Administration has itself conceded that the bill violates the “normal rule,” by admitting the insurance restrictions CANNOT stand without an (unconstitutional) individual mandate.  (For the record, Klein himself has stated that the insurance regulations would be ineffective without a mandate, effectively agreeing with Judge Vinson that the mandate affects other significant portions of the law.)  Therefore, by the Administration’s own argument, more of the law than just the offending provision (i.e., the mandate) must be struck down – and the Judge engaged in what this morning’s WSJ editorial rightly termed “an act of judicial modesty” by not attempting to divine what portions of the law can stand and what portions must fall.

As to the ruling’s comment that “this is not a situation that is likely to be repeated,” that speaks to the gargantuan nature of the legislation itself.  (Do those citing this passage believe Congress should start passing 2,700-page comprehensive bills every week?)  Moreover, as the ruling indicates, “the question of severability ultimately turns on the nature of the statute at issue.”  In other words, a textual analysis of the statute at issue is ALWAYS required, meaning that by definition the situation facing this particular court will not be repeated.

Yesterday’s ruling striking down the entire law was an example where a judge – facing agreement from both parties that the individual mandate was inextricably linked to other significant portions of the statute – decided NOT to impose his judgment for that of Congress in deciding what specific provisions should and should not stand.  Where Democrats call such a step judicial activism, many Republicans may view such a ruling as an example of judicial modesty.

Policy Brief: A Reading Guide to the Senate Bill’s Backroom Deals

“I think the health care debate as it unfolded legitimately raised concerns not just among my opponents, but also amongst supporters that we just don’t know what’s going on.  And it’s an ugly process and it looks like there are a bunch of back room deals.”

 — President Obama, interview with ABC’s Diane Sawyer, January 25, 2010[i]

The White House recently enacted its health “reform” agenda by signing the 2,733 page legislation (H.R. 3590) that passed the Senate in December.[i]  While the Administration touts its removal of the “Nebraska FMAP provision” that saw 49 other states funding Nebraska’s Medicaid largesse (known as the “Cornhusker Kickback”), it did not address other deals negotiated by Democrats in the Senate legislation.  Many other backroom agreements are included in the legislation the President has now enacted into law:

Page 428—Section 2006, known as the “Louisiana Purchase,” provides an extra $300 million in Medicaid funding to Louisiana.[ii]

Page 2132—Section 10201(e)(1) provides an increase in Medicaid Disproportionate Share Hospital (DSH) payments for Hawaii, meaning 49 other states will pay more in taxes so that Hawaii can receive this special benefit.

Page 2203—Section 10317 amends provisions in Medicare so that hospitals in Michigan and Connecticut can receive higher payments.

Page 2222—Section 10323 makes certain individuals exposed to environmental hazards eligible for Medicare coverage.  The definition used in the bill ensures the only individuals eligible will be those living in Libby, Montana.

Page 2237—Section 10324 increases Medicare payments by $2 billion in “frontier states.”[iii]

Page 2354— Section 10502 spends $100 million on “debt service of, or direct construction of, a health care facility,” language which the sponsors intended to benefit Connecticut.[iv]

Page 2395—Section 10905(d) exempts Medigap supplemental insurance plans from the new tax on health insurance companies; press reports indicate this provision was inserted to benefit an insurer headquartered in Nebraska.[v]

Even after the public outrage from the “Cornhusker Kickback,” Democrats used separate legislation designed to “fix” this particular provision (H.R. 4872) to add yet more deals behind closed doors.[vi]  For instance, page 71 (Section 1203(b)) of the “fixer” bill provided an increase in Medicaid disproportionate share hospital payments just for Tennessee.  And Section 2213 (page 145) of the original version of the “fixer” bill[vii] included a sweetheart deal making the Bank of North Dakota the only financial facility in the country exempted from Democrats’ government takeover of student loans—a backroom deal so egregious that it was removed within hours once the bill was finally revealed to the American public.[viii]

These specific agreements and provisions also do not display the full scope of the White House’s legislative deal-making.  For instance, the head of the pharmaceutical industry said the Administration approached him to negotiate a deal with his industry: “We were assured, ‘We need somebody to come in first.  If you come in first, you will have a rock-solid deal.’”[ix]  And former Democratic National Committee Chairman Howard Dean publicly admitted at a town hall forum that “The reason that tort reform is not in the [health care] bill is because the [Democrat Members] who wrote it did not want to take on the trial lawyers.”[x]

The many pages of backroom deals included in the health care takeover legislation raise several questions: If the bill itself was so compelling, why did Democrats need billions of dollars in “sweeteners” negotiated in secret in order to vote for it?  If President Obama was so concerned about the public perceptions created by the backroom dealing, why did he not propose to strike all the special agreements?  Does he believe that this pork-barrel spending is the only reason why Democrats voted to pass his government takeover of health care in the first place?



[i] Senate-passed bill text available at http://www.opencongress.org/bill/111-h3590/text.

[ii] “Dems Protect Backroom Deals,” Politico February 4, 2010, http://www.politico.com/news/stories/0210/32499.html.

[iii] Congressional Budget Office, score of H.R. 3590 including Manager’s Amendment, December 19, 2009, http://cbo.gov/ftpdocs/108xx/doc10868/12-19-Reid_Letter_Managers_Correction_Noted.pdf.

[iv] “Dodd Primes Pump in Bid to Survive,” Politico December 22, 2009, http://www.politico.com/news/stories/1209/30881.html.

[v] “How Nebraska’s Insurance Companies Stand to Profit from Ben Nelson’s Compromises in Health Care Bill,” Huffington Post 21 December 2009, http://www.huffingtonpost.com/2009/12/21/how-nebraskas-insurance-c_n_400080.html.

[vi] Senate-passed bill (H.R. 3590) text available at http://www.opencongress.org/bill/111-h3590/text; reconciliation bill (H.R. 4872) text available at http://www.opencongress.org/bill/111-h4872/text.

[vii] House Rules Committee amendment in the nature of a substitute, http://docs.house.gov/rules/hr4872/111_hr4872_amndsub.pdf.

[viii] “Conrad Wants Controversial Carve-Out Axed,” Roll Call March 18, 2010, http://www.rollcall.com/news/44368-1.html.  The provision was stripped by the Rules Committee prior to full House consideration of H.R. 4872.

[ix] Quoted in “White House Affirms Deal on Drug Cost,” New York Times August 5, 2009, http://www.nytimes.com/2009/08/06/health/policy/06insure.html?_r=3&scp=8&sq=kirkpatrick&st=cse.

[x] Exchange at Town Hall forum in Reston, VA, August 25, 2009, available online at http://www.youtube.com/watch?v=IdpVY-cONnM.

Policy Brief: Obamacare — Bad for States

Would Make States’ Tough Fiscal Situations Worse.  The health care takeover[i] requires all states to pay a portion of the proposed Medicaid expansion beginning in 2017—tens of billions in new state spending imposed by federal requirements.  However, states cannot afford their existing Medicaid programs, which is why Congress included a $90 billion Medicaid bailout in the 2009 “stimulus” package.  To make things worse, the cost of the Medicaid expansion borne by states will rise appreciably in years 2019 and beyond—further pinching state budgets.

Forces Higher State Medicaid Spending.  The health care takeover gives states a higher federal match to expand the Medicaid program to all individuals earning up to 133 percent of the federal poverty level ($29,327 for a family of four).  However, such an expansion—when coupled with an individual mandate to purchase insurance—is likely to increase Medicaid enrollment among individuals who are already eligible for the program—and for whom a full federal match will not be available.

Encourages States to Drop Medicaid Entirely.  The health care takeover prohibits states from reducing their Medicaid eligibility standards or procedures at any point in the future.  Governors in both parties have already voiced significant concerns about what Tennessee Democratic Gov. Phil Bredesen termed “the mother of all unfunded mandates” being imposed upon states.[ii]   As a result of the added restrictions in Democrats’ proposals, the head of Washington state’s Medicaid program believes that states facing severe financial distress may say, “I have to get out of the Medicaid program altogether.”[iii]

Undermines State Flexibility.  Provisions in the legislation significantly erode states’ independence in managing their Medicaid programs.  For instance, the health care takeover requires states to include family planning services for individuals with incomes up to the highest Medicaid income threshold in each state—undermining flexibility established by Republicans in the Deficit Reduction Act of 2005.

Supersedes State Authority.  The health care takeover provides that states that do not establish health insurance exchanges will see the federal government create them on states’ behalf.  Furthermore, the legislation also provides that states that prohibit abortion coverage in their insurance exchanges will see their citizens’ federal tax dollars used to subsidize insurance plans that cover elective abortions in other states.

Backroom Deals Create State Inequities.  The public focus on the “Cornhusker Kickback” regarding Nebraska’s Medicaid funding omits the other backroom deals included in the legislation—most of which remain, creating additional inequities among states.  The health care takeover includes provisions known as the “Louisiana Purchase,” providing an extra $300 million in Medicaid funding to Louisiana.[iv]  And the legislation also provides an additional $100 million in Medicaid hospital funding solely to Tennessee.  Many may wonder why citizens in other states should see their taxpayer dollars fund special deals for places like Tennessee and Louisiana.



[i] Senate-passed bill (H.R. 3590) text available at http://www.opencongress.org/bill/111-h3590/text; reconciliation bill (H.R. 4872) text available at http://www.opencongress.org/bill/111-h4872/text.

[ii] Kevin Sack and Robert Pear, “Governors Fear Medicaid Costs in Health Plan,” New York Times July 19, 2009, http://www.nytimes.com/2009/07/20/health/policy/20health.html.

[iii] Clifford Krauss, “Governors Fear Added Costs in Health Care Overhaul,” New York Times August 6, 2009, http://www.nytimes.com/2009/08/07/business/07medicaid.html.

[iv] “Dems Protect Backroom Deals,” Politico February 4, 2010, http://www.politico.com/news/stories/0210/32499.html.

Policy Brief: Making a Bad Bill Worse: Highlights of Reconciliation Legislation

The reconciliation bill recently released by Democrats[i] would not mitigate the effects of the Senate-passed health care bill, but in fact make them worse:

More Tax Increases:  The reconciliation bill raises taxes by an additional $50 billion when compared to the Senate bill, for an overall tax increase of $569.2 billion.  The bill specifically expands the Medicare payroll tax—for the first time in history—to all investment income for individuals with incomes over $200,000 and families with incomes over $250,000.  Because the underlying Senate bill does NOT index this new tax for inflation, more and more middle-class American families will be hit by this tax over time, just like the Alternative Minimum Tax (AMT).

Higher Premiums:  The reconciliation bill nearly doubles the tax on health insurers beginning in 2014, and also raises taxes and fees on drug makers and medical devices.  The Congressional Budget Office has specifically stated that these taxes will be passed on to all Americans in the form of higher health costs and rising insurance premiums.[ii]

Budget Gimmicks Galore:  The reconciliation bill includes a physician payment “cliff” in Medicaid, whereby payments for primary care physicians are increased for 2013 and 2014 only—a provision designed to mask the long-term cost of such a change.  The bill also hides the cost of filling in the “doughnut hole” by not fully phasing in the provision until 2020.  Health insurance subsidy levels would be increased in the short-term—but would grow more slowly in the years after 2019.  And the threshold at which health insurance plans would be hit by the “Cadillac tax” would grow more slowly after 2020—resulting in a major and growing tax increase on the middle class if actually implemented.

Phony Deficit Reduction:  The reconciliation bill and the Senate-passed measure combined do not reduce the deficit after excluding the more than $120 billion in revenue generated by the Social Security program and the CLASS Act long-term care entitlement.  Since this revenue will eventually be used to pay out benefits to these two programs, the bill does NOT reduce the deficit in the near-term—or the long term.

More Lost Jobs:  The reconciliation bill nearly triples the penalty—from $750 to $2,000—on businesses that cannot afford to provide their workers with health coverage, and applies these taxes to part-time as well as full-time workers.  As if these higher taxes were not enough of a disincentive to prevent firms from hiring workers, the reconciliation bill also includes an unprecedented extension of the Medicare tax to all non-wage income.  These tax increases will raise the top marginal rate on small business owners by 20%, and the top tax rate on investment income by 60%–discouraging the activity needed to grow the economy and create new jobs.

More Medicare Cuts:  The reconciliation bill raises another $66.1 billion from Medicare Advantage, cutting a total of $202.3 billion from the program in order to fund new entitlements for other Americans.  The total Medicare cuts in the bill now add up to $523 billion.

Sweetheart Deals:  The reconciliation bill retains unpopular provisions in the Senate-passed measure—the “Louisiana Purchase,” Medicare coverage for individuals in Libby, Montana, and $100 million for a Connecticut hospital—while adding yet more backroom deals: Increased disproportionate share hospital payments for Tennessee, and other hospital payments to targeted areas.  Many may wonder why citizens in other states should see their taxpayer dollars fund special deals in places like Tennessee and Louisiana.

Empty Promises:  The reconciliation bill forces an additional 1 million individuals into Medicaid on top of the 15 million already forced into Medicaid in the Senate bill.  That means that 16 million of the 32 million newly insured individuals would obtain that coverage through Medicaid—a program which President Obama admitted at the recent health care summit suffers from serious access problems already.[iii]  The Congressional Budget Office estimates that 2 million fewer individuals will have a choice of plans on the Exchange, and 23 million individuals would remain uninsured.

Federal Funding of Abortion:  The reconciliation bill fails to prohibit federal funds from flowing to plans that cover elective abortion, and also increases funding for community health centers by $2.5 billion—and neither the reconciliation bill nor the Senate-passed measure include ANY prohibition on community health centers using these federal funds to offer elective abortion.



[ii] Congressional Budget Office, Letter to the Honorable Evan Bayh, November 30, 2009, http://www.cbo.gov/ftpdocs/107xx/doc10781/11-30-Premiums.pdf.

[iii] Letter from the President to Congressional Leaders, March 2, 2010.

McCain Amendment 3570 to H.R. 4872 — Strike Sweetheart Deals

Senator McCain has offered an amendment (#3570) to strike the “sweetheart deals” included in the health care law and the reconciliation bill.

Summary:

  • The amendment repeals the following “sweetheart deals” included in the health care law and the reconciliation bill:
  1. Increase in Medicaid disproportionate share hospital (DSH) payments just for Tennessee (Section 1203, page 71 of H.R. 4872);
  2. Increase in Medicaid DSH payments just for Hawaii (Section 10201, page 2132 of H.R. 3590);
  3. The “Louisiana Purchase” to increase Medicaid funding just for Louisiana (Section 2006, page 428 of H.R. 3590);
  4. Increased Medicare reimbursement just for frontier states (Section 10324, page 2237 of H.R. 3590);
  5. Medicare coverage just for Libby, Montana residents exposed to environmental hazards (Section 10323, page 2222 of H.R. 3590);
  6. A $100 million hospital funding provision intended to benefit Connecticut (Section 10502, page 2354 of H.R. 3590); and
  7. Extension of Section 508 hospital reimbursement provisions just to Michigan and Connecticut (Section 10905, pages 2205-06 of H.R. 3590)

Arguments in Favor:

  • Citizens in other states should not be asked to see their taxpayer dollars funding special “backroom deals” for certain locales.
  • The public outrage over the “Cornhusker Kickback” included in H.R. 3590 may lead many to believe it is long past time for Congress to strip out ALL of the “backroom deals” included in the Senate bill – rather than using the reconciliation measure to add more of them.
  • Given President Obama’s campaign promises of transparency – including his famous pledge to televise negotiations on C-SPAN – the American people deserve action consistent with Democrats’ rhetoric.
  • If Democrats support this government takeover of health care, they should be willing to support the legislation on its own merits – without the need to add on extraneous “backroom deals” in order to win votes.