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The Wall Street Journal put together an excellent editorial yesterday on the intersection of Obamacare and immigration.
First, starting in 2016, employers with 50 or more full time employees are required to offer health insurance for each of their workers, or else pay a penalty of $3,000 per each person who fails to receive proper Obamacare coverage.
So what happens with the undocumented immigrants allowed to stay under President Obama’s Executive Action? The numbers are estimated to be upwards of 5 million people.
“The government’s petition says that the executive action intended to provide ‘work authorizations’ so that undocumented immigrants could find jobs in the U.S. without working illegally for less than market wages, which might harm American workers. But wait: Employers aren’t required to offer ObamaCare coverage or subsidies to these immigrants. The statutory language in the Affordable Care Act says that only ‘lawful residents’ are eligible, and the government’s petition specifically notes that the immigration action does not ‘confer any form of legal status in this country.'”
Therefore, the immigrants (with deferred deportation), are exempt from Obamacare. While that may be good for the taxpayer, it is not necessarily good news for the worker. From a purely financial perspective, companies could easily save the $3000 penalty cost per worker if they hire and employ an Obamacare-exempt immigrant instead of a citizen/resident subject to the Obamacare rules.
The Wall Street Journal sums up the scenario nicely:
“Suppose businesses subject to ObamaCare employ only 40%, or two million, of the up to five million immigrants covered by the president’s executive action. At $3,000 an employee, businesses would save about $6 billion a year. Companies already dealing with the added expense of operating in the Obama economy — burdened by regulations, high taxes and other barnacles — would find those savings hard to pass up.”
Exempting employers who hire these immigrants from the law’s penalties gives the immigrants a distinct market advantage over U.S. citizens. That flies in the face of the president’s statement that his executive action would not “stick it to the middle class” by allowing these individuals to “take our jobs.” It is also contrary to the government’s statement that the executive action would make it less likely that these undocumented immigrants hurt American workers by “illegally” working “for below market rates.” They could still work at below-market rates, only it would be legal.
All of this was inevitable. The root problem with ObamaCare is that one party rammed it through Congress without a single Republican vote, while the law’s supporters didn’t even read it, let alone vet it through congressional committees. As a result, ObamaCare as written was unworkable, and the administration has had to repeatedly amend it by constitutionally dubious executive fiat.
Now this flawed law is clashing with yet another constitutionally dubious executive action that the administration couldn’t be bothered to pass through the legislature.”
The Obama Administration may yet decide to grant Obamacare to these immigrants currently exempted. But for the time being, since their status presents a situation may wreak havoc in the business world, leaving the current court injunction against the immigration order in place is the only suitable solution until the Obamacare-immigration situation is sorted out. Otherwise, expect the economy to continue to weaken from this latest threat.
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As has been earlier reported here, the debt ceiling jumped dramatically the day after the debt ceiling was lifted on November 2nd ($339 billion) and continued to soar all month.
By the end of the month, the debt had doubled, adding another $335 billion. All in all, $674 billion in US debt had accumulated, making the total US debt a staggering $18.827 trillion.
Also noted by Zerohedge, the debt was $10.6 trillion on January 21, 2009, on the day President Obama took office. The total debt is now up just over 77% under Obama’s tenure, to $18.8 trillion.
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Last week, UnitedHealth, one of the biggest insurers in the United States, announced that it would cease a good amount of healthcare marketing in 2016 as it ponders whether or not to stay in the exchanges for 2017 and beyond. Now, the CEO has come out and stated that UnitedHealth should have waited longer before joining Obamacare.
From Bloomberg:
UnitedHealth Group Inc. should have stayed out of Obamacare’s new individual markets longer, the chief executive officer of the biggest U.S. health insurer said Tuesday, after announcing last month that it will take hundreds of millions of dollars in losses related to the business.
While the company’s other lines of business are growing, instead of expanding into Obamacare next year, the company should have kept waiting, UnitedHealth CEO Stephen Hemsley said at an investor meeting in New York.
“It was for us a bad decision,” Hemsley said. “I take accountability for sitting out the exchange market in year one so we could in theory observe, learn and see how the market experience would develop. This was a prudent going-in position. In retrospect, we should have stayed out longer.”
UnitedHealth said on Nov. 19 that it may quit selling coverage in the Affordable Care Act’s individual markets in 2017. The markets are a key element of the law’s goal to cover about 10 million Americans next year, and UnitedHealth had expanded its offerings for 2016, after initially holding off when the markets started covering people in 2014.
Losses from the plans this year and next will total more than half a billion dollars, the company has said, and UnitedHealth will scale back efforts to market coverage to millions of people shopping for 2016 insurance on the Affordable Care Act’s new marketplaces.
UnitedHealth is not alone in its Obamacare struggles. Other insurers, including competitors Anthem Inc. and Aetna Inc., have also either suffered losses in the markets or said they haven’t seen the margins they expected. Next year will be the law’s third of providing coverage.
“It will take more than a season or two for this market to develop,” Hemsley said. “We did not believe it would form this slowly, be this porous, or become this severe.”
Hemsley said today that the rest of UnitedHealth’s businesses are faring better than its comparatively small exchange operation, which it has said covers about 540,000 people. The company said it expects operating earnings of $13.1 billion to $13.5 billion next year, on revenue of $180 billion to $181 billion.
UnitedHealth advanced 1.7 percent to $114.59 at 10:01 a.m. in New York. The stock has gained 11 percent this year, as of Monday’s close.
Enrollment at the company’s insurance businesses will climb to 47.4 million to 48.2 million people next year, from 46.2 million at the end of 2015. The company is projecting more enrollees in line of business including Medicare Advantage and Medicaid. Separately, UnitedHealth said its drug-coverage business for the elderly, Medicare Part D, may lose as many as 650,000 customers.
Across all of its insurance businesses, UnitedHealth said it expects to spend about 81.5 cents of every dollar it takes in from premiums on medical expenses.
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On Friday, Republicans Overseas Action, Inc. filed a 78-page Plaintiffs’ Motion for Leave to Amended Complaint against the Foreign Account Tax Compliance Act (FATCA), the intergovernmental agreements (IGAs), and the Report of Foreign Bank and Financial Accounts (FBAR) in the U.S. District Court for the Southern District of Ohio, on behalf of Senator Rand Paul and nine other co-plaintiffs.
The then plaintiffs include “U.S. citizens, former U.S. citizens, Republicans, and/or non-Republicans” who are willing “to defend 8.7 million overseas Americans and 12.6 million stateside “green card” holders in their fight against FATCA tyranny.”
“The U.S. Treasury, IRS, and U.S. Financial Crimes Enforcement Network (FCEN) are still named as Defendants in this amended verified complaint for declaratory and injunctive relief with eight-count of constitutional violations:
Count 1 – The IGAs are Unconstitutional Sole Executive Agreements Because They Exceed the Scope of the President’s Independent Constitutional Powers
Count 2 – The IGAs are Unconstitutional Sole Executive Agreements Because They Override FATCA
Count 3 – The Heightened Reporting Requirements for Foreign Financial Accounts Deny U.S. Citizens Living Abroad the Equal Protection of the Laws
Count 4 – The FATCA FFI Penalty is Unconstitutional under the Excessive Fines Clause
Count 5 – The FATCA Pass-through Penalty is Unconstitutional under the Excessive Fines Clause
Count 6 – The FBAR Willfulness Penalty is Unconstitutional under the Excessive Fines Clause
Count 7 – FATCA’s Information Reporting Requirements are Unconstitutional under the Fourth Amendment
Count 8 – The IGAs’ Information Reporting Requirements are Unconstitutional under the Fourth Amendment”
Now, the relevance.
“In 2010, Congress passed FATCA, which was enacted as a means to find foreign accounts of US taxpayers (such as a Swiss bank account). Overseas banks must also report to the IRS any bank accounts held by Americans; this has led to the unintended consequence of many banks choosing not to service expats because of the additional headache for the particular financial institution.
The FBAR applies to any U.S. person who owns, has beneficial interest or signature authority over foreign financial accounts that exceed $10,000 in the aggregate in value at any time during the year. If you have any foreign bank accounts, this also has to be disclosed on Part III of Schedule B, whether the FBAR is required to be filed or not. FinCEN 114 must be e-filed and cannot be mailed, with the absolute filing deadline on June 30, with no extension possible.”
As a practitioner both representing taxpayers on FATCA issues and speaking with other practitioners, we listen to the IRS gloating about the $10 billion they have raised for the federal coffers from FBAR & FATCA violators. But they never say how much is evaded tax versus how much is just outrageous penalty. Most people I speak to would be surprised (as I would be) if more than 5% ($500 million) of the $10 billion was actual tax. The ratio of penalty to evaded tax is ludicrous if not unconstitutional.
Further, I have seen no evidence of a cost-benefit analysis that includes taxpayer compliance costs (including FFI costs) in determining if the whole FBAR/FATCA regime is worthwhile. And these compliance costs MUST include the burden of Americans being “fired” by their foreign banks and investment advisors, and money (taxes and GDP) lost by the US from individuals being induced to give up their citizenship.
FATCA and FBAR are burdensome to our citizens living abroad. The actions of the ROA are certainly a step in the right direction.
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A few days ago, UnitedHealthcare announced that the possibility of withdrawing from the Obamacare health insurance exchanges. This is a significant announcement, as UnitedHealthcare is one of the biggest insurers in the country. The impact of withdrawl would affect hundreds of thousands of people with regard to their healthplans; the timing — right before 2016 elections — would be critical.
HHS is predicting 10 million enrollees in 2016, which is half of what was originally projected when Obamacare was passed. It’s unlikely that enrollment will suddenly surge this year, which means that the financial instability of the entire model will continue.
If UnitedHealthcare decides to discontinue next year, those with their coverage will have to — yet again — choose another plan, but this time from a smaller list of coverage providers. Since Open Enrollment begins in the fall, right around Election time, such a move could wreak havoc on the final stretch.
One economist suggests that prices will increase even more.
“The year 2017 is significant for insurers, because that’s the year when several programs designed to mitigate risk for insurers through federal backstops go away. The hope was that those programs would act as training wheels for Obamacare in its first few years of implementation, but after that, the insurers were supposed to be able to thrive on their own. UnitedHealth’s statement suggests otherwise.
If UnitedHealth and other insurers decide to exit, remaining insurers will be forced to take on even more high-risk enrollees, prompting them to either raise rates further or exit themselves. That in turn would deprive individuals of choices and remove competition, a key purpose of the exchanges.”
So don’t expect United to suddenly see a reason to get back into the 2017 market, not without hefty risk-corridor subsidies — which under any other circumstances would be called “corporate welfare.” Given that Congress isn’t likely to reverse course and underwrite ObamaCare losses, the path to the exit remains the likely course for United, and perhaps some of its competitors, too.
United says it will remain committed to its Medicaid and Medicare businesses, and of course it will stick with its employer-based group coverage, where the issues of ObamaCare regulation have less impact.”
“But UnitedHealth and other insurers need more Americans to come into the public exchanges because the patients that are signing up for coverage are sicker, making a “higher overall risk pool,” insurance executives say. It’s a key reason many Americans are seeing rate increases of 10 percent or more across the country on public exchanges.
United has discovered that the trade-offs in mandates and forced coverage don’t pay off. It’s a bait-and-switch for insurers by the Obama administration, but it’s even worse of a bait-and-switch for consumers.
Subsidies do not mitigate the fact that consumers have to pay both the premium and then thousands of dollars for care out of their own pocket before insurance takes effect, except in rare and catastrophic circumstances.
Consumers used to have an option for that kind of health insurance – catastrophic coverage, used to indemnify against unforeseen major health events. Those policies featured low premiums and left routine care for consumers to negotiate directly with providers on a cash basis. Combined with health-savings accounts (HSAs), those plans offered a rational approach to balancing health and economic requirements, especially for younger consumers who rarely need more than one or two clinic visits a year, which would cost far less than either comprehensive-coverage premiums or deductibles even in the pre-ACA era.
Instead of “affordable care” promised by President Obama and Democrats, consumers have instead discovered they have effectively been forced to pay for catastrophic health insurance at comprehensive-plan prices. They have become victims of a bait-and-switch scheme that the government would vigorously prosecute – if it wasn’t masterminding the scheme itself.”
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In recent years, President Obama has issued his Fall Unified Agenda right around Thanksgiving, as most of the country is preparing for the holiday season. This year was no different. This past Friday, the 2015 regulatory list was released.
According to Forbes, “the Fall 2015 Agenda reports on 3,297 rules and regulations at the ‘active,’ ‘completed’ and ‘long-term’ stages, many of them holdovers from earlier volumes. This is down from 3,415 last year.
Active (these include pre-rule, proposed and final): 2,244 (there were 2,321 last fall)
Completed: 554 (629 last fall)
Long-term: 500 (465 last fall)
TOTAL: 3,297 (3,415 last fall)
The Agenda appeared pretty much like clockwork every spring and fall, usually April and October, between 1983 and 2011. But recent releases seem timed to draw as little attention as possible, appearing often at holiday weekends:
Fall 2012: The Friday before Christmas (that Monday was Christmas Eve)
Fall 2013: The day before Thanksgiving
Fall 2014: The Friday before Thanksgiving
Fall 2015: The Friday before Thanksgiving
And more:
“The Fall 2015 Agenda reports on 218 ‘economically significant’ rules and regulations at the ‘active,’ ‘completed’ and ‘long-term’ stages. This is up from 200 at this point last year.
Active (pre-rule, proposed, final): 149 (131 last fall)
Completed: 36 (31 last fall)
Long-term: 33 (38 last fall)
TOTAL: 218 (200 last Fall)
The Fall Agenda includes environmental and energy regulations, such as rules for pesticides and coal; these new items come on the heels of other environmental rules earlier this year including smog, fracking, and carbon dioxide emissions. The American Action Forum calculated the financial impact of “regulation in 2015 to a whopping $183 billion — about half from final rules and the other from proposed rules.”
To view the Fall Unified Agenda, go here.
People go into business to do things and make things in this great country of ours — not to comply with government diktats. The unprecedented growth of bureaucratic regulations has been one of the key factors of our lackluster, anemic economic recovery.
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A must read from the Washington Examiner today on the subject of Obamacare, insurance companies, and bailouts. I republished the article in full.
The Department of Health and Human Services attempted to reassure private insurers on Thursday that they’ll be able to recover losses from participating in Obamacare by claiming it was an “obligation” of the U.S. government to bail them out.
At issue is a provision within the law known as the risk corridors program. Under the program, which runs from 2014 through 2016, the federal government is to collect money from health insurers doing better than expected and use those funds to provide a federal backstop to other insurers who incur larger than expected losses from rising medical claims. The idea was to provide training wheels to insurers in the first years of Obamacare’s implementation, and to take away any incentive for insurers to cherry pick only the healthiest customers.
Republicans, fearing that this could turn into an open-ended government bailout in the event of industry-wide losses, included a provision in last year’s spending bill that limited the program, requiring HHS to pay out only from the pool of money collected, rather than supplementing it with other sources of government funding. President Obama signed that bill.
Now that insurers have been able to look at medical claims, what they’ve found is that enrollees in Obamacare are disproportionately sicker, and losses are piling up. For the 2014 benefit year, insurers losing more than expected asked for $2.87 billion in government payments through the risk corridors program, but HHS only collected $362 million from insurers performing better than expected. Thus, the funds available to the federal government only amounts to 12.6 percent of what insurers argue that they’re owed.
So insurers are not happy. And now the industry lobbying group America’s Health Insurance Plans — which happens to be helmed by Marilyn Tavenner, who previously oversaw the implementation of Obamacare as head of the Centers for Medicare and Medicaid Services — is aggressively fighting for more money.
In a statement issued Thursday, the same day that the nation’s largest insurer, UnitedHealth announced it may exit Obamacare due to mounting losses, Tavenner said, “We’ve been very clear with the administration about the serious challenges facing consumers and health plans in this Exchange market. Most recently, nearly 800,000 Americans have faced coverage disruptions as a result of the significant and unexpected shortfall with the risk corridors program. When health plans cannot rely on the government to meet its obligations, individuals and families are harmed as a result. The administration must act to ensure this program works as intended and consumers are protected.”
In an effort to reassure the industry, CMS, the HHS agency Tavenner previously led, issued guidance reiterating that HHS would use money collected from insurers in 2015 and possibly 2016 to make up the $2.5 billion shortfall that exists in 2014.
But what happens if there still isn’t enough money, and after 2016, the program is taking in less than the money sought by insurers?
HHS said it, would “explore other sources of funding for risk corridors payments, subject to the availability of appropriations. This includes working with Congress on the necessary funding for outstanding risk corridors payments.”
The agency further added: “HHS recognizes that the Affordable Care Act requires the Secretary to make full payments to issuers, and HHS is recording those amounts that remain unpaid following our 12.6 percent payment this winter as fiscal year 2015 obligation of the United States government for which full payment is required.”
In reality, this doesn’t mean much at all. Risk corridor payments for 2016 won’t be due until mid-2017, and by that point, it will be an issue for a future Congress and future president. Nothing that a previous administration’s HHS said in 2015 will really matter.
That said, this is another demonstration that for all of Obama’s sanctimonious rhetoric about taking on insurance companies. In reality, his signature legislative achievement was to put government in bed with private insurers. And now that his pet project backfired, he wants taxpayers to take care of those very insurance companies he spent years railing against.
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In an effort to encourage people to sign up for the Affordable Care Act, the Obama Administration has boosted the low cost of premiums — the part that is subsidized. What they aren’t mentioning is that in exchange for low monthly costs, enrollees face high deductible costs.
“Most Americans will find an option that costs less than $75 a month,” President Obama said. Additionally, Sylvia Mathews Burwell, the Secretary of Health and Human Services, issued a report analyzing premiums in the 38 states that use HealthCare.gov. “Eight out of 10 returning consumers will be able to buy a plan with premiums less than $100 a month after tax credits,” she said.”
The trade-off for low-ish premiums means that many Obamacare plans have high deductibles. “The Internal Revenue Service defines a high-deductible health plan as one with an annual deductible of at least $1,300 for individual coverage or $2,600 for family coverage.”
But in many states, deductibles are even higher than that. According to Hot Air, “in many states, more than half the plans offered for sale through HealthCare.gov, the federal online marketplace, have a deductible of $3,000 or more. Once you add in several hundred dollars per month for your plan premium, a rate that may or may not be lower than it used to be and add in a $3,000 or more deductible, the average individual could be paying over $5,000 out of pocket in a year before their ‘affordable’ insurance kicks in. This is true for employer sponsored plans as well.”
These costs are exorbitant for working class families. If they are already needing to seek health insurance and subsidies through the Obamacare exchanges, how can they possibly have the capability to find several extra thousand dollars in their budgets in order to pay out-of-pocket costs to meet their deductibles before their insurance really kicks in. With unemployment high and wages flat, these rising deductibles (and also premiums in many cases) hit Americans hard.
And don’t forget, plans purchased are for 2016. The Obamacare penalty fee continues to ramp up for those who decide to forgo health insurance coverage entirely for this coming year. Those considering opting should be reminded of what the financial costs will be to do so.
Your penalty tax is the greater of either 1) a flat-dollar amount based on the number of uninsured people in your household; or 2) a percentage of your income. If you are able to go by the flat-dollar amount, the fee increases to $695 in 2016 plus half that amount for each uninsured child under age 18. Your total household penalty is capped at three times the adult rate. If you qualify for the percentage of your income, it is 2.5% for this coming year.
It is increasingly clear as we continue along the path of the Affordable Care Act that this legislation truly is not affordable.
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Congress is slated to take up the Fed Oversight Reform and Modernization Act (FORM Act) this week. The FORM Act. It includes four key policy changes. A summary from the Daily Signal:
1) Require the Federal Reserve to Operate Under a Rules-Based Framework.
Throughout its history, the Fed has operated within a purely discretionary policy framework. Rules-based monetary policy, on the other hand, gives a central bank a clear set of guidelines that credibly commit it to future policy actions.
Naturally, central banks will be hesitant to support this type of policy change because it limits their discretionary authority, but the FORM Act would allow the Fed to choose its own monetary policy rule. Furthermore, the new framework would give the Fed the flexibility to stop following its policy rule, provided that it explains its decision to Congress.
This approach would greatly reduce uncertainty concerning the Fed’s future policy actions without overly restricting the Fed.
2) Restrict the Fed’s Emergency Lending Authority.
The Fed has a long history of lending to insolvent firms, and the best approach to fixing this problem would be to eliminate the Fed’s emergency lending authority.
The FORM Act doesn’t go this far, but it would implement restrictions aimed at making it more difficult to lend to insolvent firms at subsidy rates of interest, a major problem during the 2008 crisis.
3) Audit the Fed.
Many commentators have pointed out that the Federal Reserve is already subject to financial audits, but the Fed’s monetary policy decisions are off limits to Government Accountability Office (GAO) audits. The FORM Act would remove the restrictions that prevent such GAO audits, thus allowing for a retrospective exam of the Fed’s monetary policy actions.
Critics paint these policy audits as harassment of the Fed, but the GAO is an independent, nonpartisan congressional watchdog that regularly investigates federal agencies. Several former GAO officials have even pointed out that critics of “Audit the Fed” are maligning the GAO. No aspect of what the Federal Reserve does should be off limits to the GAO.
4) Establish the Centennial Monetary Commission.
The FORM Act’s Centennial Monetary Commission is a bipartisan congressional commission based on the one proposed in the Centennial Monetary Commission Act of 2013. The goal of this type of policy would be to “establish a commission to examine the United States monetary policy, evaluate alternative monetary regimes, and recommend a course for monetary policy going forward.”
The commission’s recommendations would not bind Congress to implement any legislation, but it would provide Members of Congress with information they need to fulfill their constitutional responsibilities for monetary policy. Moreover, such a commission would provide a public venue for both critics and supporters to discuss the Fed’s past operations and the appropriate role for the central bank going forward.”
Both President Obama and Fed Chairwoman Janet Yellen vehemently opposes the monetary reforms. “In a letter Monday to House Speaker Paul Ryan and Minority Leader Nancy Pelosi, Yellen called the proposed law a “grave mistake,” that would undermine Fed policy and the greater U.S. economy.” Yellen further claimed that the FORM Act could cause “millions of Americans to suffer” and would “politicize monetary policy.” Likewise, President Obama threatened to veto the bill if it passed because “the proposal would politicize the Federal Reserve’s monetary policy decisions.”
Peter Wallison from AEI provided some perspective on the FORM Act; he contends that the FORM Act is a positive bill that will bring greater information to financial markets. “Indeed, lack of information on something as important as monetary policy can be harmful to investors and to the economy as a whole, because investors and businesses deploy capital based on what they think will happen to interest rates in the future. The less information, the riskier these deployments are; the riskier they are, the more costly they are to make — which is why they may not be made at all. In addition, lack of information introduces unnecessary market volatility, as investors and businesses have to buy or sell securities — or even cancel contemplated transactions — because facts about the Fed’s policies have now come to light that show investors or businesses were operating on the wrong assumptions. This volatility is also costly for the economy.”
Congress has not yet voted on the FORM Act, and it is unknown whether it has the ability to pass. Nevertheless, the conversation about financial reform, and the role of the Fed — who has not always acted independently in recent years — is worthwhile.
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De Blasio recently announced the implementation of the NYC Commuter Benefits Law, which goes into effect on January 1, 2016. This law “requires for-profit and nonprofit employers with 20 or more full-time employees in New York City to offer commuter benefits. Employers can save by reducing payroll taxes and employees can lower their monthly expenses by using pre-tax income to pay for their commute.”
What De Blasio’s press release doesn’t say is that companies face costs associated with this new tax scheme. It doesn’t discuss the cost of implementation and the use of administrative resources. It doesn’t mention the constant upkeep, such as W2 adjustments or employee changes on and off the plan. All this adds more burden to small businesses.
This NY Commuter Benefits Law encapsulates De Blasio’s continued effort to destroy New York City growth and employment; it worsens the cost of being in business in New York. There is likely no net benefit to the employer for his forced participation.
It continues a longstanding situation where New York City mayors do what they think *is* good, but their schemes are really destructive. For instance, one of the most laughable programs in the world requires landlords in New York City to set up bank accounts for everyone who has a security account with their landlord; there are easily hundreds of thousands of such accounts in the city; virtually every New York City resident loses money, because the tax treatment of this at the state and federal level, so that it is a loss for everyone. It’s utterly ridiculous. For this particular law, however, I’ll give De Blasio the benefit of the doubt that he is just severely incompetent and economically clueless.
The continued assault on small businesses within the city make it harder for the economy to grow. The city needs less, not more, regulations for businesses to prosper.
