Update #1: From a former clerk for Chief Justice Roberts:
@donaldhtaylorjr @bjdickmayhew Strikes me as a minimum price regulation, of an insurer already in the market. So should be fine under NFIB
— Stephen E. Sachs (@StephenESachs) March 9, 2017
Does the Late Enrollment Penalty (LEP) in the AHCA pass the duck test for taxation?
In 2012’s NFIB vs. Sebelius decision, Chief Justice Roberts, writing the controlling opinion for the majority upheld the Affordable Care Act’s individual mandate. Justices Ginsberg and Sotomayer argued that the mandate was constitutional for both the logic used by Roberts and more fundamentally as a just exercise of Congress’s power under the Commerce Clause. Chief Justice Roberts had a much narrower ruling. He found that the individual mandate penalty was effectively a tax and Congress has the power to tax.
He found that the individual mandate passed the duck test to be considered a tax.
It was collected by the IRS, it was administered by the IRS, enforcement was through a limited set of tools normally used for tax enforcement and it was not punitive or overly coercive in nature. Therefore it was an allowable tax. More fundamentally, it quacked, waddled, swam and tasted like a duck so it was a duck.
The LEP is different.
SEC. 2711. ENCOURAGING CONTINUOUS HEALTH INSURANCE COVERAGE.
‘‘(a) PENALTY APPLIED.—
‘‘(1) IN GENERAL.—Notwithstanding section 2701, subject to the succeeding provisions of this section, a health insurance issuer offering health insurance coverage in the individual or small group market shall, in the case of an individual who is an applicable policyholder of such coverage with respect to an enforcement period applicable to enrollments for a plan year beginning with plan year 2019 (or, in the case of enrollments during a special enrollment period, beginning with plan year 2018), increase the monthly premium rate otherwise applicable to such individual for such coverage during each month of such period, by an amount determined under paragraph (2).
‘‘(2) AMOUNT OF PENALTY.—The amount determined under this paragraph for an applicable policyholder enrolling in health insurance coverage described in paragraph (1) for a plan year, with respect to each month during the enforcement period
applicable to enrollments for such plan year, is the amount that is equal to 30 percent of the monthly premium rate otherwise applicable to such applicable policyholder for such coverage during such month.
The LEP differs in several significant manners. It is not collected by the IRS. It is paid directly to a private entity. It is wildly variant in its size depending on age and region. A 64 year old in North Pole, Alaska will pay a much higher LEP than a 22 year in Pittsburgh, Pennsylvania.
If the three votes on the Supreme Court that voted against the government’s position in NFIB v Sebelius are joined by two of the three Justices who supported Robert’s narrow reading exclusively in support of the individual mandate passing the duck test as a tax, there is significant legal risk to the LEP.
If there is significant legal risk that the LEP could be tossed at any point by a court, insurers who already are modeling a potential death spiral because of the LEP’s weakness and inefficiency would have to further discount its effectiveness when setting premiums or insist on contracts with the Center for Medicare and Medicaid Services (CMS) that mirror the current language on Cost Sharing Reduction subsidies (CSR). Currently, if CSR subsidies are not paid, insurers can terminate their policies immediately instead of at the end of the year.
If the goal of the Republican Party is to advance a bill that stabilizes a market while making policy changes that they prefer, even deeper fundamental legal and constitutional uncertainty is contra-indicated.
DA, not to jump your train of thought, but you GOTS to find the transcript of this ZEGS presser introducing AHCA Trumpcare. It.Is.Mind.Blowing.
Where the fuck is Mayhew when you need him? That guy would have already been all over this!
You are forgetting that the whole lawsuit was based on the activity/inactivity distinction. The theory was that Congress could regulate only activity under its commerce clause power. If it wanted to regulate inactivity — not buying health insurance — it could only exercise its taxation power.
This is regulating the activity of selling insurance. Congress is telling insurance companies they can sell to individuals for X price, but if the individual has been out of the market, insurance companies can sell for X + 30%.
Of course, the real reason republicans/libertarians thought the mandate was unconstitutional was because a democratic passed it. TrumpCare wouldn’t have that problem.
Major Major Major Major
Gin & Tonic
@Corner Stone: I saw on Twitter that he said the plan can’t work if healthy people have to pay more to subsidize sick people.
Can he have actually said that? That is precisely what insurance *is*. Spreading risk over a large population. Fucking Edward Lloyd understood that in the 1690’s.
The goal of the Republican Party is to reduce taxes for the rich. In this case the taxes, particularly the capital gains tax, that were passed in support of the ACA. Everything after that is ideology driven smoke and mirrors.
I can’t find a transcript, but here is the video via CSPAN if anyone has the desire to listen to him drone on and kill half your brain cells.
@Gin & Tonic: Absolutely, yes. This is what I said in a prior thread while he was speaking:
“ZEGS also went to great pains to point out that the health insurance market works by having the healthy pay for the sick. His answer? Remove/Move the sick to a high risk pool and then re-insure them to lower the cost to insurance companies. And then give the states back the authority on how they use their money to solve problems.”
@hovercraft: It’s horrifying. At the same time he is shamelessly lying about ACA he is also clearly and directly telling anyone who listens that he is going to fuck them right up the poop chute if they pass this bill. He puts that Blue Eyed Baby Boy Smile on it while he says out loud where the nut punch is coming from. He lied, lied, lied and then he told the truth. And both were truly scary to watch.
Agreed, where is Mayhew? This guy Anderson has completely failed as a replacement for vital soccer referee posts. Also, why does autocorrect turn Mayhew to mayhem? Pretty sure that is a clue to something.
@ODB: Actually think that would be the critical factor for Alioto and Thomas. A Republican bill is ipso facto Constitutional.
But does the LEP weigh the same amount as a piece of wood?
From Joe Kennedy II about Trumpcare:
@patrick II: The Republican Party is a wholly owned subsidiary of about 1,000 people, almost all billionaires or more. The donor agenda is low taxes on them, and low or no benefits for anyone else and no public commons. From the Koch Brothers on down, that is what they desire.
@rikyrah: Saw that this morning. Eloquent and true.
Sessions considers special counsel, but not for Trump
03/09/17 12:55 PM
By Steve Benen
One of the oddities of 2017 is how much time Republicans have spent looking backwards. Donald Trump, for example, has invested an enormous amount of energy focusing his predecessor, the 2016 election, and voter fraud that exists only in the president’s mind. House Oversight Committee Chairman (R-Utah), meanwhile, remains focused on Hillary Clinton’s email server from eight years ago.
And at the Justice Department, as Politico reports, Attorney General Jeff Sessions is apparently amenable to the idea of appointing a special counsel, not to investigate Trump’s scandals, but to look over the work done by Sessions’ predecessors.
So, after sending my “don’t vote for this bill” screed to Rep. Tipton, I get a message from his office on my telephone machine a couple days later – oddly truncated so that I don’t get all of it – asking me to attend some sort of telephone town meeting. huh. Figured I’d be the *last* person that Koch-blower would want to hear from. Of course, the devil is in the details of attendance, which was somehow the thing that turned up missing.
The Republican Health Care Plan Is a Disaster For Their Most Reliable Voters
by Nancy LeTourneau
March 9, 2017 10:57 AM
When Obamacare passed, one of the provisions that we heard the most about was the fact that young people could stay on their parent’s health insurance plan until they were 26. That provided a bridge for many of them to possible employer-provided insurance. And as Republicans look to gut Obamacare, it is one of the regulations that is likely to be continued.
What was less well-covered was the fact that Obamacare also provided a bridge for older Americans into Medicare. For those who didn’t have employer-provided coverage, premiums for someone in the 50-65 age range were somewhere in the range of $10,000 a year – hardly affordable for most people. Add to that the possibility of a pre-existing condition which precluded a lot of plans and it was not uncommon for people to go without insurance and simply hope (or pray) that they could avoid catastrophe until they became eligible for Medicare.
Medicaid expansion the subsidies on the exchanges were not only a godsend to people in this age group with no insurance. They allowed many to leave jobs they’d been chained to simply because of the employer-provided health insurance to pursue either early retirement of a career that could take them through semi-retirement.
This is the group that would be most impacted by the Republican plan to repeal/replace Obamacare. The Kaiser Family Foundation has put together a helpful tool to determine how subsidies/tax credits will affect different age groups at various income levels. Here’s what it looks like for someone who is 60 years old making $30,000 a year.
The vast majority of people in this category would see their subsidies/tax credits reduced by over 50% – making health care virtually unaffordable for most of them.
This is one of the main drivers for the AARP’s opposition to the Republican plan. Here is some of what they wrote about that in their letter to Congress.
Here is why that is significant. Exit polls indicate that 50-64 year-olds were the largest portion of the electorate in 2015 (30%) and that Trump won this age group by 8 points (52-44). Since race was a significant factor in this election, it is also important to note that Trump won white voters in this age group by 28 points (62-34). Anyone who watched the outbreak of blowback to Republicans at town hall meetings over Obamacare in recent weeks probably noticed that it came predominantly from older white Americans in their districts/states.
@Gin & Tonic: yes that is exactly what he said. Watched the PowerPoint presentation.
@rikyrah: Why stop there, I’m sure there are all kinds of goodies from Hillary’s time at State that haven’t been looked at. And of course there is the 8 year reign of terror under Clinton/Reno.
The difference is that the penalties were associated with not doing something. In this case, you get charged more if you do something later than you should have. The fact that this is essentially the same thing as penalizing you for not doing something is eclipsed by the fact that you aren’t actually required to do anything. Doing nothing still results in no penalty. Part D and Part B of Medicare both have late enrollment penalties, although in that case, these “penalties” are actuarially derived. They are meant to account for the fact that you are likely to take everything you would have taken out over your lifetime (or a very high percentage of that) without having paid in for the same number of months.
Is it? Congress expressly disavowedthe use of whatever Commerce Clause power it might have to regulate the business of insurace back in 1951, when it passedand Truman signed the McCarran-Ferguson Act.
I certainly don’t expect Ryan to know the law, and Trump probably thinks of the airport in Vegas when he hears the name McCarran, but there must be committee staff lawyers who know this shit.