Former CBO Chief: Congress Never Meant to Limit Obamacare Subsidies
A Supreme Court ruling expected this summer will determine whether the federal government can subsidize the insurance costs of individuals in states that did not establish their own health care exchanges under the Affordable Care Act.
Douglas Elmendorf was the director of the Congressional Budget Office when Congress debated the bill, and on Tuesday he provided some ammunition to backers of the law who insist that that Congress did not intend to prevent payments of subsidies to consumers in states using the federal exchange.
Related: How Obamacare Could Be Squeezing Consumer Spending
In an interview with CNBC’s John Harwood at the Peter G. Peterson Foundation’s 2015 Fiscal Summit*, Elmendorf said that before the ACA passed, the CBO analyzed the bill for members of Congress, many of whom were powerfully opposed to it. At the time, he said, there was a common understanding on Capitol Hill that the subsidies would be available to states regardless of the status of their exchanges.
“That analysis was subject to a lot of very intense scrutiny and a lot of questions,” he said. “My colleagues and I can remember no occasion on which anybody asked why we were expecting subsidies to be paid in all states regardless of whether they established exchanges or not. And if people had not had this common understanding…then I’m sure we would have had a lot of questions about that.”
Pressed by Harwood, Elmendorf added, “My colleagues and I talked to a lot of people, with a lot of questions about nearly every aspect of the analysis that we did…and we could not remember anybody asking us any questions about what would happen in the federal exchange different from what would happen in the state exchanges.”
Even so, the language of the law states that the subsidies would apply to exchanges “established by the State” and the Supreme Court will decide how literally those words must be interpreted.
*Pete Peterson also funds The Fiscal Times.
Quote of the Day: A Big Hurdle for the Tax Cuts
“He goes in and campaigns on an issue, and the challenge is he then talks about executing drug dealers. Why do you think the press is going to cover the tax cuts if you’ve given them the much more exciting issue?”
-- Grover Norquist, president of tax-cutting advocacy group Americans for Tax Reform, on President Trump’s failure to sell the tax law.
The Obamacare Mandate That Could Produce $12 Billion in Fines in 2018
Republicans effectively eliminated the individual Obamacare mandate in the tax package signed late last year. Although the new regulation reducing the mandate penalty to zero doesn’t take effect until 2019, President Trump has cited the rule change as a victory over the health law so many conservatives oppose. “Essentially, we are getting rid of Obamacare. Some people would say, essentially, we have gotten rid of it," Trump told a crowd in Michigan two weeks ago.
However, many parts of the Affordable Care Act are still in effect and will continue to operate even after the individual mandate is eliminated in 2019.
In particular, the employer mandate, which requires companies with more than 50 employees to offer health benefits or face fine of roughly $2,000 per worker, will continue to play a significant role in the Obamacare system. The Congressional Budget Office estimates that the mandate will produce more than $12 billion in fines in 2018 alone.
Some conservative groups are pushing lawmakers to stop enforcing the employer mandate, but the IRS is still working to enforce the law. According to The New York Times Monday, the IRS is sending out notices to more than 30,000 businesses that have failed to comply.
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Security may be the top policy issue for Republican voters, but the economy is the top concern for Democrats, independents and voters overall, according to Morning Consult’s latest polling on the midterm elections. Health care is third on the list, followed by “seniors’ issues.” The results are based on surveys with more than 275,000 registered U.S. voters from February 1 to April 30.
Number of the Day: $13 Billion
An analysis by Bloomberg finds that the roughly 180 companies in the S&P 500 that have reported earnings for the first three months of the year saved almost $13 billion thanks to the corporate tax cut enacted late last year. Those companies’ effective tax rate dropped by more than 6 percentage points on average. About a third of the tax savings went to 44 financial firms.
How a Florida Doctor with Social Ties to Trump Delayed a $16B Billion VA Project
A West Palm Beach doctor who is friends with Ike Perlmutter, the chairman of Marvel Entertainment and an informal adviser to President Trump on veterans’ issues, has held up “the biggest health information technology project in history — the transformation of the VA’s digital records system,” Politico’s Arthur Allen reports. Dr. Bruce Moskowitz “objected to the $16 billion Department of Veterans Affairs project because he doesn’t like the Cerner Corp. software he uses at two Florida hospitals, according to four former and current senior VA officials. Cerner technology is a cornerstone of the VA project. … Moskowitz’s concerns effectively delayed the agreement for months, the sources said.” Read the full story.