Tag Archives: Repeal

News

How states can resist Obamacare, and the benefits of doing so

3 Comments

From the American Spectator, a look at what states can do to block the implementation of Obamacare.

Excerpt:

Although the voters can put an end to the madness on November 6, the states don’t need to wait until Election Day to take aim at a point of vulnerability that remains in place despite the Court’s latest caprice. They can refuse to implement the law’s insurance exchanges.

[…]The law calls for the states to set up these new bureaucracies, whose ostensible purpose will be to provide “marketplaces” in which people with no employer-based health insurance can shop for coverage at competitive rates. Now that the Court has upheld the individual mandate, these insurance exchanges constitute the key to the success or failure of the law. They are also its Achilles’ heel.

How’s that? Well, as the Cato Institute’s Michael Cannon succinctly puts it, “Without these bureaucracies, Obamacare cannot work.” And, oddly enough, the law doesn’t actually require states to set up these “marketplaces.” Moreover, there is no rational incentive for them to do so. If a state sets up an exchange, it then must pay for it, which won’t be cheap. Cannon writes, “States that opt to create an exchange can expect to pay anywhere from $10 million to $100 million per year to run it.” This is a burden that the states, most of which are already in deep financial trouble, are not likely to embrace with enthusiasm.

The federal government can set up its own exchanges, in theory, but Obamacare stipulates that Washington would then be required to pick up the tab as well. And, as Cannon goes on to point out, “The Obama administration has admitted it doesn’t have the money — and good luck getting any such funding through the GOP-controlled House.” And it gets worse. If the federal government is forced to set up an exchange, it faces yet another huge problem. As Sally Pipes and Hal Scherz write, “The text of the law stipulates that only state-based exchanges — not federally run ones — may distribute credits and subsidies.”

Thus, if a state refuses to set up an exchange, the feds have no real ability to do so either. The states have an opportunity, therefore, to shoot a poison arrow directly into Obamacare’s Achilles’ heel.

[…]”Resisting the implementation of exchanges is good for hiring and investment. The law’s employer mandate assesses penalties — up to $3,000 per employee — only to businesses who don’t satisfy federally-approved health insurance standards and whose employees receive ‘premium assistance’ through the exchanges.”

In other words, a state that declines to set up an exchange will protect the businesses of that state from avoidable and job-killing penalties. This reality has apparently begun to sink in. There has been a noticeable decline in enthusiasm for exchanges among states that had begun work on them shortly after Obamacare passed.

The article notes that a bunch of governors and legislatures in conservative states have already taken steps to resist implementing Obamacare, including Louisiana governor Bobby Jindal, who is an Oxford-educated expert in health care policy.

News

Keith Hennessey explains one strategy for undoing Obamacare

Leave a comment

In the Wall Street Journal.

Excerpt:

Now that the Supreme Court has ruled ObamaCare’s individual mandate constitutional, the direction of American health policy is in the hands of voters. So how do we get from here to “repeal and replace”?

Step one is electing Mitt Romney as president, along with Republican House and Senate majorities. Without a Republican sweep, the law will remain in place.

But a President Romney does not need 60 Republican senators to repeal core elements of ObamaCare. Democrats lost their 60th senate vote in early 2010 after Scott Brown took Edward Kennedy’s seat. To bypass a Senate GOP filibuster and enact portions of ObamaCare, they used a special legislative procedure called reconciliation.

Reconciliation allows a bill to pass the Senate in a limited time period, with limited amendments, and with only 51 votes; filibusters are not permitted. In 2010, Democrats split their health-policy changes into two bills, one of which they enacted through this fast-track process. In 2013, a Republican majority could use the same reconciliation process to repeal those changes.

The reconciliation process, however, applies only to legislative changes to taxes, spending and debt, or the change must be a “necessary term or condition” of another provision that affects taxes or spending.

Crucial parts of ObamaCare meet this test. Thus, if a President Romney has cohesive and coordinated majorities in the House and Senate, a reconciliation bill could repeal the Affordable Care Act’s Medicaid expansion, insurance premium and drug subsidies, tax increases (all 21 or them), Medicare and Medicaid spending cuts, its long-term care insurance program known as the Class Act, and its Independent Payment Advisory Board, a 15-member central committee with vast powers to control health-care and health markets.

Chief Justice John Roberts ruled that the financial penalty enforcing the individual mandate is within Congress’s constitutional power to “lay and collect Taxes,” and that the mandate and penalty are inextricably linked. This should suffice to enable repeal, through reconciliation, of both the individual and employer mandates, and their respective penalty taxes.

The state exchanges and insurance rules—”guaranteed issue,” which forces an insurer to sell a policy to someone who is already sick, and “community rating,” which severely limits the insurer’s right to charge that person a higher premium—are procedurally more difficult. Yet both are linked to the individual mandate, which increases taxes. Whether they can be repealed in a reconciliation bill will ultimately be decided by the Senate Parliamentarian.

Once the individual mandate is repealed, these popular insurance changes cannot stand by themselves. Without the mandate, people have every incentive to save on premiums and not buy insurance until they fall ill. This will send premiums through the roof for healthy people and, if the government clamps down on increased premiums, destroy private insurance companies. Those Republicans who say they favor legislated guaranteed-issue and community-rating requirements but oppose the mandate will be forced to acknowledge that all three must go.

So, for those who are concerned about repealing Obamacare, this is the way forward. We have a tough battle to get it it done, but it is possible.

News

Do the Boehner and Reid plans address the concerns of credit agencies?

6 Comments
Obama Budget Deficit 2011
Obama Budget Deficit 2011

The Heritage Foundation assesses the new Boehner and Reid plans: can they stop us from getting our credit downgraded?

First, the credit agencies:

The second and even more crucial issue is whether Congress will take necessary action beyond the next year to bring our debt under control over the medium and long-term.  This is where the rating agencies really voice their strong concern. Again, Standard & Poor’s:

Congress and the Administration might also settle for a smaller increase in the debt ceiling, or they might agree to a plan that, while avoiding a near-term default, might not, in our view, materially improve our base case expectation for the future path of the net general government debt-to-GDP ratio.”

Moody’s response is similar:

The outlook assigned at that time to the government bond rating would very likely be changed to negative at the conclusion of the review unless substantial and credible agreement is achieved on a budget that includes long-term deficit reduction. To retain a stable outlook, such an agreement should include a deficit trajectory that leads to stabilization and then decline in the ratios of federal government debt to GDP and debt to revenue beginning within the next few years.

What the rating agencies are saying is that Congress and the President must pass legislation that immediately begins to rein in deficits and bring our debt down to more acceptable levels, and either keeps it there or continues to drive it down further.

Right now, there are two plans on the table, because the Senate rejected Boehner’s “Cut, Cap and Balance” plan. Do either of these plans address the concerns of the two credit agencies?

The Boehner proposal would cut $1.2 trillion in discretionary spending.  There is no assurance that these cuts will occur, but let’s assume they do.  Let’s even be generous and assume that they are – in the words of S&P– “enacted and maintained throughout the decade.”  This would cut debt held by the public from its projected $24.9 trillion in 2021 to $23.7 trillion, and when measured against the economy from 104% to 99.4%.  Certainly, this is an improvement, but it is hardly declining from today’s levels, nor would these cuts fundamentally restructure entitlements – the real driver of our deficits in the future.

Step two in the Boehner proposal would reduce deficits by an additional $1.8 trillion over ten years.  Even assuming these cuts all happen, and even assuming they were all spending cuts – a broad assumption given the President’s rhetoric surrounding tax hikes on the wealthy – this would bring publicly held debt down to 92% of GDP. Better, but not that much.  Even throwing in interest savings from deficit reduction would bring this down to 88%.  Again, not much improvement and far worse than today’s debt ratio.

The Reid proposal doesn’t move the ball forward enough either.  At best it falls somewhat short of Boehner’s $3 trillion by $800 billion ($1.2 trillion in discretionary and some confusing savings to be had from winding down operations in Iraq and Afghanistan of $1.0 trillion.)

Neither of this week’s dueling debt ceiling proposals would pass the test from Moody’s or Standard and Poor’s for a credible, firm and actionable plan that would turn the tide of our deficits to put our debt on a manageable track. And if that holds true, then a downgrade by the rating agencies could occur smack in the very election year the President is trying to scoot through.

[…]The fact is, the only plan that could likely pass muster with Moody’s and Standard and Poor’s is House passed, Cut, Cap and Balance.  Why?  They tackle spending with firm caps that are enforceable, and before the end of the decade bring spending down to 19.9% of GDP and keep it there.

My guess right now is that Obama is going to sign the Boehner plan into law. He has no choice, Boehner pwnd him in the deal negotiations. Obama is going to have to yield, or all the blame for the default will go on HIS shoulders. As much as I like the new Boehner plan, it doesn’t look like it’s going to stop our debt rating from being downgraded. We needed to pass the Cut, Cap and Balance plan, but the Democrats rejected it. Think of that when interest rates shoot up. A debt downgrade is going to cause WIDE-RANGING repercussions in the lives of ordinary working families.