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During oral arguments of the Burwell v Obamacare case before the Supreme Court, the U.S. Solicitor General Donald Verrilli made the case that the “court should defer to the interpretation of the Internal Revenue Service, which said the tax credits apply nationwide.” When the Obamacare decision was announced, it is clear that SCOTUS did apply deference, which was absolutely the worst possible solution.
The idea of “deference” refers “ to “Chevron deference,” “a doctrine mostly unknown beyond the halls of the Capitol and the corridors of the Supreme Court. It refers to a 1984 decision, Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., and it is one of the most widely cited cases in law. Boiled down, it says that when a law is ambiguous, judges should defer to the agency designated to implement it so long as the agency’s decision is reasonable.”
Given the current catastrophic state of the IRS, SCOTUS should have run from this idea as quickly as possible. The IRS has proven overwhelmingly in the last few years that no decision it makes is “reasonable” and therefore cannot be trusted as an unbiased, independent agency capable of carrying out a professional opinion on this or virtually any manner.
Even more unfortunately, not only did SCOTUS apply deference, which allowed the IRS rule to stand, it did so by taking expanding the concept of “Chevron Deference” even further in order to validate its decision. George Will, in a column written just after the Obamacare ruling was handed down, described how the decision now allows the executive branch to apply deference in situations that are not just ambiguous, but also “inconvenient for the smooth operation of something Congress created.” This is not interpreting law — this is legislating.
Therefore, the actions of the IRS — that is, willy-nilly creating rules which expanded the scope of Obamacare beyond its text — were indeed endorsed and given political cover by Roberts and his majority as they applied Chevron Deference. Instead of sending Obamacare back to the legislature for clarification, the judicial branch decided to step in and interpret the law for the sake of alleviating “inconvenience”. But this is wrong. Convenience, ease, and expediency should never be a rationale for the judicial branch to go beyond the scope of deciding whether or not a law is constitutional, as they did here.
The judicial branch, with this decision, seemed to act more in harmony with the legislative and executive one, instead of serving as a check against the others. What’s more, “besides violating the separation of powers, this approach raises serious issues about whether litigants before the courts are receiving the process that is due to them under the Constitution. It would result if its branches behaved as partners in harness rather than as wary, balancing rivals maintaining constitutional equipoise.”
Will summed up the damage Roberts has done, which is likely to have lasting effects in the courts for years to come. Roberts goes “beyond “understanding” the plan; he adopts a legislator’s role in order to rescue the legislature’s plan from the consequences of the legislature’s dubious decisions. By blurring, to the point of erasure, constitutional boundaries, he damages all institutions, not least his court.”
How the Supreme Court uses and applies Chevron Deference in the coming years, in the way they did with this decision, will be especially interesting, given the expanded roles of many government agencies such as the EPA and FCC.
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Chief Justice Roberts on Obamacare in 2012: “It is not our job to protect the people from the consequences of their political choices.”
This line famously echoed in Robert’s majority the first time Obamacare came before the Supreme Court, pointing out that it is not the business of the Supreme Court of the United States to fix laws (good or bad) that Congress passes.
Three years later, Roberts made an about-face on this exact point essentially saying with his decision that Obamacare is a bad law and poorly written — so we will fix it.
It really is a fascinating thing. First we have Pelosi saying we have to pass the law to see what is in it. And then when we actually get to see and experience the incoherence of the law, Roberts declares that Congress’s stupidity is not his job to fix.
But then the problem became that the Senate didn’t actually have the votes to fix it properly or repeal it entirely. Congress discovered that the law which was passed (state exchanges only) was not the version Congress wanted (federal exchanges too), but the Senate couldn’t get the 60 votes they needed to pass the version they wanted, especially after the Republicans lost Massachusetts a couple years ago.
So good old Roberts gifted them what they needed to have the law that they should have written with this recent opinion. And for Robert’s act of judicial overreach and maneuvering, Scalia’s dissent was particularly scathing:
“Rather than rewriting the law under the pretense of interpreting it, the Court should have left it to Congress to decide what to do about the Act’s limitation of tax credits to state Exchanges…The Court’s insistence on making a choice that should be made by Congress both aggrandizes judicial power and encourages congressional lassitude…
Just ponder the significance of the Court’s decision to take matters into its own hands. The Court’s revision of the law authorizes the Internal Revenue Service to spend tens of billions of dollars every year in tax credits on federal Exchanges. It affects the price of insurance for millions of Americans. It diminishes the participation of the States in the implementation of the Act. It vastly expands the reach of the Act’s individual mandate, whose scope depends in part on the availability of credit…
But this Court’s two decisions on the Act will surely be remembered through the years. The somersaults of statutory interpretation they have performed (“penalty” means tax, “further [Medicaid] payments to the State” means only incremental Medicaid payments to the State, “established by the State” means not established by the State) will be cited by litigants endlessly, to the confusion of honest jurisprudence. And the cases will publish forever the discouraging truth that the Supreme Court of the United States favors some laws over others, and is prepared to do whatever it takes to uphold and assist its favorites. I dissent.”
Scalia was particularly clear that the Supreme Court took it upon themselves to insert themselves into the legislative branch. Put another way, Chief Justice Roberts became the 60th vote in the Senate.
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From Scotusblog:
Decision of the Fourth Circuit is affirmed in King v. Burwell. 6-3.
This means that individuals who get their health insurance through an exchange established by the federal government will be eligible for tax subsidies.
Chief Justice writes for the Court. Six are the Chief, Kennedy, Ginsburg, Breyer, Sotomayor, and Kagan.
Dissent by Scalia, joined by Alito and Thomas.
Court refused to apply Chevron deference — that is, to find that the statute is ambiguous and that the federal government’s interpretation was reasonable.
From Scalia’s dissent: “We should start calling this law SCOTUScare.” From the intro to Scalia’s dissent: the majority’s reading of the text “is of course quite absurd, and the Court’s 21 pages of explanation make it no less so.”
From the majority opinion: “Congress passed the Affordable Care Act to improve health insurance markets, not to destroy them.”
The majority also acknowledges that the challengers’ “arguments about the plain meaning . . . are strong.”
‘In this instance, the context and structure of the Act compel us to depart from what would otherwise be the most natural reading of the pertinent statutory phrase’…
The opinion is here
Justice Scalia’s dissent, via the WSJ:
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I’ve written several times over the years about Obama’s economic policies and anti-business climate as factors that have hampered this country’s growth and recovery. Phil Gramm has a good piece in the WSJ recently that gave a succinct overview of all that is still wrong with the economy. Obama continues to insist that either a) the economy is good or b) any problems are someone else’s fault. Do yourself a favor and read this piece which is sobering, but accurate, about the state of our economy today.
What’s Wrong With the Golden Goose?
Since the Obama recovery began in the second quarter of 2009, public and private projections of economic growth have consistently overestimated actual performance. Six years later, projections of prosperity being just around the corner have given way to a debate over whether the U.S. has fallen into “secular stagnation,” a fancy phrase for the chronic low growth seen in much of Europe.
This is just another in a long line of excuses. America’s historic ability to outperform Europe is well documented; we call it American exceptionalism. It has always been based on the fact that the U.S has had better, more market-driven economic policies and our economy therefore worked better. But, as the U.S. economy is Europeanized through higher taxes and greater regulatory burdens, American exceptionalism is fading away, taking economic growth with it.
How bad is the Obama recovery? Compared with the average postwar recovery, the economy in the past six years has created 12.1 million fewer jobs and $6,175 less income on average for every man, woman and child in the country. Had this recovery been as strong as previous postwar recoveries, some 1.6 million more Americans would have been lifted out of poverty and middle-income families would have a stunning $11,629 more annual income. At the present rate of growth in per capita GDP, it will take another 31 years for this recovery to match the per capita income growth already achieved at this point in previous postwar recoveries.
When the recession ended, the Federal Reserve projected future real GDP growth would average between 3.8% and 5% in 2011-14. Based on America’s past economic resilience, these projections were well within the norm for a postwar recovery. Even though the economy never came close to those projections in 2011-13, the Fed continued to predict a strong recovery, projecting a 2014 growth rate in excess of 4%. Yet the economy underperformed for the sixth year in a row, growing at only 2.4%.
Implicit in these projections and in the headlines of most economic news stories—which to this day blame cold winters, wet springs, strikes, hiccups and blips for America’s failed recovery—is the belief that there has been no fundamental change in the U.S. economy. Underlying this belief is the assumption that either the economic policies of the Obama administration are not fundamentally different from the policies America has followed in the postwar period or that economic policy doesn’t really matter.
And yet we know that the Obama program represents the most dramatic change in U.S. economic policy in over three-quarters of a century. We also know from the experience of our individual states and the historic performance of other nations that policy choices have profound effects on economic outcomes.
The literature on economic development shows that U.S. states and nations tend to prosper when tax rates are low, regulatory burden is restrained by the rule of law, government debt is limited, labor markets are flexible and capital markets are dominated by private decision making. While many other factors are important, economists generally agree on these fundamental conditions.
As measured by virtually every economic policy known historically to promote growth, the structure of the U.S. economy is less conducive to growth today than it was when Mr. Obama became president in 2009.
Marginal tax rates on ordinary income are up 24%, a burden that falls directly on small businesses. Tax rates on capital gains and dividends are up 59%, and the estate-tax rate is up 14%. While tax reform has languished in the U.S., other nations have cut corporate tax rates. The U.S. now has the highest corporate rate in the world and the most punitive treatment of foreign earnings.
Meanwhile, federal debt held by the public has doubled, so a return of interest rates to their postwar norms, roughly 5% on a five-year Treasury note, will send the cost of servicing the debt up by $439 billion, almost doubling the current deficit.
Large banks, under aggressive interpretation of the 2010 Dodd-Frank financial law, are regulated as if they were public utilities. Federal bureaucrats are embedded in their executive offices like political officers in the old Soviet Union. Across the financial sector the rule of law is in tatters as tens of billions of dollars are extorted from large banks in legal settlements; insurance companies and money managers are subject to regulations set by international bodies; and the Consumer Financial Protection Bureau, formed in 2011, faces few checks, balances or restraints.
With ObamaCare the government now effectively controls the health-care market—one seventh of the economy. The administration’s anti-carbon policies hamstring the energy market, distort investment and lower efficiency. Despite the extraordinary bounty that has flowed to America from an unfettered Internet, Mr. Obama has dictated that the Web be regulated as a 1930s monopoly, bringing the cold dead hand of government down on what was once called the “new economy.”
During Mr. Obama’s presidency, the number of Americans receiving food stamps has risen by two-thirds and the number of people drawing disability insurance is up more than 20%. Not surprisingly, labor-force participation has plummeted. Crony capitalism and artificially low interest rates have distorted the capital markets, misallocating capital, overpricing assets and underpricing debt.
Despite the largest fiscal stimulus program in history and the most expansive monetary policy in more than 150 years, the U.S. economy is underperforming today because we have bad economic policies. America succeeded in the Reagan and post-Reagan era because of good economic policies. Economic policies have consequences.
With better economic policies America was like the fabled farmer with the goose that laid golden eggs. He kept the pond clean and full, he erected a nice coop, threw out corn for the goose and every day the goose laid a golden egg. Mr. Obama has drained the pond, burned down the coop and let the dogs loose to chase the goose around the barnyard. Now that the goose has stopped laying golden eggs, the administration’s apologists—arguing that we are now in “secular stagnation”—add insult to injury by suggesting that something is wrong with the goose.
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I have no particular favorite right now in the GOP nomination fight. As a CPA, I pay close attention to the economic policies of the various candidates.
Carly Fiorina spoke to New Hampshire Republican Party’s First in the Nation leadership summit in Nashua, N.H on the subject of small business. Being the former CEO of Former Hewlett-Packard, Fiorina offered a decent perspective, which hasn’t really been discussed at length so far by many of the other candidates.
“The heroes of the American economy are small businesses and family-owned businesses”
“For the first time in U.S. history, we are destroying more businesses than we are creating”
“All of the things they are doing up there are landing on us down here. The weight of the government is literally crushing the potential of the people of this nation”
I don’t particularly think that Fiorina has the ability to be much of a viable candidate, especially considering her failed Senate campaign against Barbara Boxer in California. I do appreciate her calling out the government’s anti-business policies, something about which I have written extensively.
Whoever becomes the Republican nominee needs to be able to speak clearly and definitively about economic issues and call out the failed government policies of higher taxes, increased regulation, and minimum wage nonsense. Small businesses have borne the brunt of Obama’s heavy-handedness, and our economy has failed to recover adequately because of it.
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Roughly 2 weeks ago, I wrote about the IRS sending out corrected tax forms for the 820,000 Obamacare users who received incorrect 1095As in late January. On March 22, it was reported that, “Federal officials said on a Friday press call that about 740,000 corrected forms have been mailed out or can be downloaded from the HealthCare.gov site. About 80,000 corrected forms will be mailed and available online next week”
However, it is apparent that the IRS still has not fixed those users who remain in tax limbo right now, because it was announced that those still affected with incorrect forms are eligible now for an extension until October 15 — but only if they request it.
Those other 740,000 users who didn’t receive their correct forms until the third week of March are not eligible for the extension, but instead have to scramble to get their taxes filed by April 15th. These users were delayed an additional 7 weeks after the government failed to send them their correct 1095As on time (January 31). The 1095A is the proof of insurance for tax forms, and is necessary to calculate whether or not the proper subsidy amount was given in 2014.
The kicker here is that a person must know that he or she needs to request the tax extension. Otherwise, they will still responsible to have their taxes filed for April 15th.
This is nearly as absurd as the scenario that is unfolding with the Obamacare users who are both uninsured and do not make enough income that requires them to file taxes. In order to claim the penalty exemption based on lack of adequate income…they must file a tax return. And what if they don’t know to do so? If they do not claim their exemption, they will be on the hook for the “shared responsibility” payment and “are likely to get hit with an unexpected tax bill later on.”
Obamacare continues to be an onerous, burdensome mess for this country.
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This year is the first year for which proof of health insurance, or payment of the “shared responsibility” tax/fee/penalty, is required to be accounted for on one’s tax return. But what happens when a person does not meet the income threshold to actually have to file their taxes?
The Weekly Standard points out that a conundrum exists for the poor. Under Obamacare rules, the economically disadvantaged,
“can get an income-based exemption if ‘you don’t have to file a tax return because your income is below the level that requires you to file.’ Sounds simple enough, right? Until further investigation reveals that this exemption is claimed directly on the tax return. That’s right – the tax return you’re not required to file.”
So the fate of those who are uninsured and also do not file? If they do not claim their exemption, they will be on the hook for the “shared responsibility” payment and “are likely to get hit with an unexpected tax bill later on.” That is sloppy at best and egregious at worst.
Obamacare purports to help those who, economically, are the least among us. The law provides financial help to purchase healthcare for the poor, or a path of exemption for those who cannot afford healthcare or the uninsured penalty. Yet it fails to provide a mechanism of compliance for those who among us who are too poor to pay taxes and the penalty. In this regard, Obamacare falls short of its most basic goals — and will wreak tax havoc in the future for those poorest ensnared by this deficiency.
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March 23, 2010: Obamacare was signed into law by President Obama. How have we fared since then? Sally Pipes over at NYDailyNews gives a good overview of how Obamacare has failed to live up to its expectations.
“Obamacare turns five years old today. But there’s little to celebrate.
When he signed his signature piece of legislation into law, President Obama guaranteed lower health-care costs, universal coverage and higher-quality care. Americans wouldn’t have to change their doctors if they didn’t want to. Five years later, the health law has failed to fulfill those grandiose promises.
“In the Obama administration,” candidate Obama boasted in 2008, “we’ll lower premiums by up to $2,500 for a typical family in a year.”
Not quite. A recent report from the National Bureau of Economic Research examined the non-group marketplace, where families and individuals who don’t get coverage through work shop for insurance. The report concluded that 2014 premiums were 24.4% higher than they would have been without Obamacare.
On Obamacare’s third birthday, the White House reassured Americans the law would protect vulnerable patient populations from increases in drug prices.
“Preventing them from being charged more because of a pre-existing condition or getting fewer benefits like mental health services or prescription drugs,” was a key purpose of the law, explained the White House.
Instead, drug costs for these patients have skyrocketed. The majority of health plans on the exchanges have shifted costs for expensive medications onto patients.
In 2015, more than 40% of all “silver” exchange plans — the most commonly purchased — are charging patients 30% or more of the total cost of their specialty drugs. Only 27% of silver plans did so last year.
Part of the problem is that Obamacare has quashed competition.
The president promised in 2013 that “this law means more choice, more competition, lower costs for millions of Americans.” But that hasn’t turned out to be true. According to the Heritage Foundation, the number of insurers selling to individual consumers in the exchanges this year is 21.5% less than the number on the market in 2013 — the year before the law took effect.
The Government Accountability Office reports that insurers have left the market in droves. In 2013, 1,232 carriers offered insurance coverage in the individual market. By 2015, that number had shrunk to 310.
A man looks over the Affordable Care Act (commonly known as Obamacare) signup page on the HealthCare.gov website in New York in this October 2, 2013 photo illustration.
As competition in the exchanges declines, so does quality — just like Obama inadvertently predicted in 2013, when he said: “without competition, the price of insurance goes up and the quality goes down.”
Consumers who purchase insurance on the law’s exchanges have fewer options than they had pre-Obamacare. McKinsey & Co. noted that roughly two-thirds of the hospital networks available on the exchanges were either “narrow” or “ultra-narrow.” That means that these insurance plans refuse to partner with at least 30% of the area’s hospitals. Other plans exclude more than 70%.
Patients may also have fewer doctors to pick from. More than 60% of doctors plan to retire earlier than anticipated — by 2016 or sooner, according to Deloitte. The Physicians Foundation reported in the fall that nearly half of the 20,000 doctors who responded to their survey — especially those with more experience — considered Obamacare’s reforms a failure.
The Obama administration claims the health-care law has been a success because millions have gained insurance coverage. But that coverage is worthless if they can’t find a doctor or hospital who will see them.
Further, as many as 89% of the Americans who signed up for Obamacare when the exchanges opened in 2013 already had insurance. In other words, many exchange enrollees simply switched from one plan to another.
And the law is set to cover far fewer people than initially promised. In March 2011, the Congressional Budget Office forecast that 34 million uninsured would gain insurance thanks to Obamacare by 2021. But this month, the agency revised that estimate to 25 million obtaining coverage by 2025.
Covering those people isn’t cheap. This month, the CBO estimated the law’s 10-year cost will reach $1.2 trillion — a far cry from the President’s initial promise of $940 billion.
So much for President Obama’s five-year-old declaration that he would not sign a plan that “adds one dime to our deficits — either now or in the future.”
Time and again, Obama has been proven wrong about what his health law would accomplish. Quality hasn’t improved, and costs continue to grow out of control. So far at least, that’s Obamacare’s legacy.”
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There have been many reports about incorrect 1095A forms being sent out. The 1095A (the Health Insurance Marketplace Statement), is the form that the government sends you if you enrolled in an Obamacare plan last year, and is your proof of insurance. This form is necessary in order to fill out your 8562 worksheet on your 2014 tax form. For more about the 1095A, go here and here .
Considering that only 6.7 million people enrolled in and paid for an Obamacare plan in 2014 (after adjusting for counting dental plans), it’s pretty terrible that the Administration sent out about 820,000 incorrect 1095A forms; that’s about 12-13% of all enrollees.
The original forms were supposed to arrive in everyone’s mailbox by January 31st (like W-2s and 1099s), but then the Administration pushed that arrival date into the first week of February. Now we are in the 3rd week of March. All the people who have incorrect 1095As have been delayed in filing their taxes.
But, a correction is near!
“Federal officials said on a Friday press call that about 740,000 corrected forms have been mailed out or can be downloaded from the HealthCare.gov site. About 80,000 corrected forms will be mailed and available online next week, they said.
Consumers who already filed their tax returns using the incorrect forms provided though state or federal exchanges won’t be required to file amended forms, and the Internal Revenue Service won’t assess additional taxes, said Mark Mazur, the Treasury Department’s assistant secretary for tax policy.
The Obama administration may re-evaluate filing extensions because of the incorrect forms, but at this time, April 15 is the end of tax-filing season based on statute, officials said.”
So all these people have had to wait an additional 7-8 weeks for a correct 1095A form that they are required by the federal government to have in order to correctly calculate their “Premium Tax Form” (Form 8562) on their 2014 taxes, because the federal government screwed up their forms in the first place. Now they have to scramble to finish their taxes by April 15th.
Good luck to the Obamacare victims.
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Jeffery Anderson over at The Weekly Standard took a peek at Obamacare’s initial projected enrollment numbers and compared them to the current actual figures. What he found was that Obamacare is not as widely successful as the rosy Congressional Budget Office (CBO) estimates from 2010.
“Given that Obamacare’s supporters like to take the Congressional Budget Office’s overly optimistic scoring of the president’s signature legislation as gospel, it’s fun to look at how poorly Obamacare is actually doing in relation to earlier CBO projections. When the Democrats rammed Obamacare through Congress in 2010 without a single Republican vote, the CBO said that the unpopular overhaul would lead to a net increase of 26 million people with health insurance by 2015 (15 million through Medicaid plus 13 million through the Obamacare exchanges minus 2 million who would otherwise have had private insurance but wouldn’t because of Obamacare).
Fast-forwarding five years, the CBO now says that Obamacare’s tally for 2015 will actually be a net increase of just 17 million people (10 million through Medicaid plus 11 million through the Obamacare exchanges minus 4 million who would otherwise have had private insurance but won’t, or don’t, because of Obamacare).
In other words, Obamacare is now slated to hit only 65 percent of the CBO’s original coverage projection for 2015.
Obamacare’s under-publicized failure on this key point is attributable to a variety of factors, including but not limited to the following: People aren’t thrilled with Obamacare-compliant insurance’s high cost and limited doctor networks, and some would even rather pay a fine for refusing to buy such insurance than pay its premiums; the Supreme Court ruled that part of Obamacare was unconstitutional, thereby giving states more freedom not to help expand it; and HealthCare.gov has been more reminiscent of DMV.org than of Expedia.com.
In addition (and just as the CBO originally projected), the bulk of Obamacare’s net coverage gains are coming from dumping people into Medicaid (59 percent of the current projected net increase in 2015), not from getting people enrolled in private insurance (41 percent). Of course, President Obama rarely if ever talks about that aspect of Obamacare — but Republicans should.”
Desperate to get more people enrolled too, the Obama Administration announced last month another “special enrollment period” around tax time this year, to allow those who found out they have to pay a penalty/tax/fee instead of having insurance in 2014, the opportunity to not make the “mistake” again.
Those who opted not to have insurance in 2014 are fined $95, or 1% of their income, whichever is greater, which they pay when then file their 2014 taxes this year. In 2015, the fine increases to $325 or 2% of income. Enrollment in the special enrollment period has been lackluster so far.
The Administration just doesn’t seem to get that many people still don’t think Obamacare to be such a great piece of legislation, and certainly aren’t tripping over themselves to purchase an Obamacare plan.
