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Trump’s IRS Gives Relief to Obamacare Walking Wounded

February 22, 2017

Consumer Power Report #536

Of what significance is the Internal Revenue Service’s (IRS) recent change to the Obama administration’s instruction that the IRS reject tax returns of people who don’t indicate whether they have insurance? Although mostly symbolic, the change of instruction is worth appreciating as a source of relief for people burdened by Obamacare.

Under the Obama administration, the IRS had scheduled a rule to take effect rejecting “silent” tax returns for the year 2016; i.e., returns whose filers failed to check a box on their return indicating whether they complied with the Affordable Care Act’s (ACA) individual mandate last year.

President Donald Trump’s IRS has suspended implementation of the Obama IRS rule, complying with Trump’s executive order minimizing the regulatory and fiscal burden ACA imposes on individuals and states.

Simply by allowing Americans to file their taxes, Trump’s IRS has protected the American people against efforts by the desperate Obama administration to enforce ACA. Former Secretary of State Hillary Clinton would likely have used the IRS that way as well, had Trump not defeated her in the 2016 presidential election.

The IRS rejection of silent returns would have been a small imposition, to be sure, considering tax filers would (and do) have to pay the tax penalty imposed by ACA’s individual mandate until Congress repeals it. But even small burdens can hurt, as Obamacare’s walking wounded can attest.

Obamacare’s walking wounded include five million Americans who lost their insurance plans when Obamacare went into effect, even though Obama had promised they could keep their plans. Also included are people whom the law would have allowed to keep their insurance plans, but whose employers cancelled them because they had grown too expensive.

Other Obamacare walking wounded include people who were denied full-time jobs at companies hovering at the threshold created by the expensive mandate requiring employers of 50 or more full-time employees to provide health insurance benefits. There is no carrot like a stick. This mandate gave employers a disincentive to hire employees. Companies that could not reduce their payroll below 50 people were suddenly required to compensate their employees more with benefits-often unwanted benefits.

Imposing health care benefits expenses on businesses created another category of Obamacare’s walking wounded: those who appeared to absorb the law without consequence, but who saw lower wages than they might have because the employer mandate requires businesses to pay employees more in benefits.

Obamacare has cost families by appearing to help them. A Stanford and Harvard University study found the Obamacare requirement that insurers allow individuals to stay on their parents’ insurance through age 26 costs families $1,200 per year, Patient Daily reported in March 2016. “The mandate is not just expensive for families. It’s intrusive,” I told Patient Daily at the time:

The dependent care mandate has the appearance of supporting families by raising the age children can remain on their parents’ insurance plans from 19 to 25. Instead it essentially charges families $7,200 over six years without telling them. Most families would have no trouble finding ways to spend that amount for the benefit of all family members, including their young adults. The mandate silently robs families of their right and ability to make those financial decisions. And not only families. The study found that wage earners who are not supporting dependents are absorbing some of the wage reductions.

For Obamacare’s walking wounded, every bit of protection from ACA’s tax penalties is welcome, even if the effects are slight.

Because the IRS has no power to alter the individual mandate tax penalty, which fines people the greater of $695 or 2.5 percent of their 2016 income, the IRS move won’t save anyone much money in the long run. Most reasonable people realize the negative consequences of failing to file a tax return are high. One disincentive is not receiving a tax refund. Another is racking up a tax bill payable to the IRS. So, even without the rule change, most people would have eventually corrected and resubmitted a previously rejected return.

Ironically, the slightness of actual relief promised by the IRS instruction change adds to its symbolic importance. If even the IRS, perhaps the most universally loathed domestic agency, grasps the toxicity of using tax penalties to enforce ACA, what does that say about members of Congress dragging their feet on repealing and replacing Obamacare?

- Michael T. Hamilton (mhamilton@heartland.org, @MikeFreeMarket) is a Heartland Institute research fellow and managing editor of Health Care News, author of the weekly Consumer Power Report, and host of the Health Care News Podcast.


IN THIS ISSUE:


HOUSE REPUBLICANS OUTLINE PLAN TO REPLACE OBAMACARE

House Republican leaders on Thursday presented their rank-and-file members with the outlines of their plan to replace the Affordable Care Act, leaning heavily on tax credits to finance individual insurance purchases and sharply reducing federal payments to the 31 states that have expanded Medicaid eligibility.

Speaker Paul D. Ryan and two House committee chairmen stood with the new secretary of health and human services, former Representative Tom Price of Georgia, preparing Republican lawmakers for a weeklong Presidents’ Day recess that promises to be dominated by angry or anxious questions about the fate of the health law.

But the talking points they provided did not say how the legislation would be paid for, essentially laying out the benefits without the more controversial costs.

It also included no estimates of the number of people who would gain or lose insurance under the plan, nor did it include comparisons with the Affordable Care Act, which has extended coverage to 20 million people.

With the House proposal’s rollback of Medicaid payments to the states, it appears likely that the number covered would be smaller.

House Republican leaders asserted in a document describing their plan that they would not “pull the rug out from anyone who received care under states’ Medicaid expansions.”

But Kenneth E. Raske, the president of the Greater New York Hospital Association, expressed alarm, saying the proposals would “put a huge amount of pressure on state budgets and put many Americans at risk of losing health care coverage.”

Sketchy as the outline was, it envisions major changes.

It would fundamentally remake Medicaid, a Great Society program that provides health care to more than 70 million Americans, not just the poor, but also middle-class people who have run out of money and need nursing home care. Under the plan, Medicaid, an open-ended entitlement program designed to cover all health care needs, would be put on a budget.

The Affordable Care Act’s subsidies, which expand as incomes decline, giving the poorer people more help, would be replaced by fixed tax credits to help people purchase insurance policies. The tax credits would increase with a person’s age, but would not vary with a person’s income.

And new incentives for consumers to establish savings accounts to pay medical expenses still assume that workers would have money at the end of a pay period to sock away.

The House Republican plan would also make it easier for consumers to buy health insurance from companies licensed in other states, an idea long promoted by Republicans in Congress and championed by President Trump in his campaign last year.

SOURCE: Robert Pear and Thomas Kaplan, The New York Times


FLORIDA GOP WRITING HEALTH CARE PLAN AHEAD OF FEDERAL CHANGES

Florida legislators are capitalizing on the uncertain fate of “Obamacare” to resurrect a controversial overhaul of Florida’s health care system nicknamed “CorcoranCare.”

Named for House Speaker Richard Corcoran, the Republican proposal first surfaced four years ago and would change the way Florida’s health care is delivered.

The proposal would create a private prepaid plan for all patients to see primary-care doctors and would redirect Medicaid money to help subsidize private health insurance for poor people.

Republicans in Congress say they plan to change Medicaid - the federal-state health program for the poor - and scrap Obamacare, officially known as the Affordable Care Act or ACA, over the next year.

But their colleagues who run the Florida Legislature say they’re moving ahead now with their own reforms.

“We’re not waiting for the feds to act,” said state Senate President Joe Negron, R-Stuart.

“We have to fund the Medicaid program this session, and if we can lay the groundwork for exploring that right now, we should,” Negron said, indicating he could get behind some aspects of House Republicans’ health care alternative.

Medicaid, which is a third of the state’s $80 billion-plus budget and growing, can’t be totally overhauled without some direction from the federal government.

But the rest of the House’s health care policies have been proposed piecemeal by Republican members this session.

And the insurance mechanism state Republicans would like to see implemented in Medicaid reform has been added to a bill dealing with health insurance for state employees.

SOURCE: Alexandria Glorioso, News-Press (Fort Myers)


OKLAHOMA LAWMAKER PREPARES BILLS PROTECTING PHYSICIANS FROM INSURERS, HOSPITALS

State Rep. Mike Ritze has authored two pieces of legislation that have passed out of committee and are ready to be heard on the House Floor.

House Bill 1709 is legislation that seeks to prohibit insurance companies from requiring practitioners to be granted hospital privileges.

House Bill 1710 is a bill that would prevent hospitals and health plans from discriminating against physicians who have been awarded board eligibility or certification by recognized specialty boards, irrespective of recertification status or participation in continuing certification or maintenance of certification.

“Obamacare is going away,” Ritze said. “And our state can’t wait until Washington can figure out how to do it. We need to act now to push through common sense legislation that moves Oklahoma healthcare forward while protecting the rights of patients and doctors. This is exactly what HB 1709 and 1710 are attempting to do.”

SOURCE: Tulsa World


SCIENCE CHALLENGES FDA VAPING REGULATION

Electronic cigarettes may be illegal to sell to people younger than 18, but plenty of 17-year-olds are pretty savvy about them.

Wyatt is a Missouri 12th grader who says he knows about 20 kids who use e-cigs and another 15 or so who smoke the real thing.

“I believe there is a difference in the harms to your body,” Wyatt said in response to a series of questions about e-cig use from Watchdog.org. “Cigarettes include a lot of tar that harms your lungs. However both include nicotine.” …

And Jamie, in Louisiana, says e-cigs are the favored choice of the one-third of her class that smokes. “Whether it’s healthier or not depends on how much nicotine you put in the e-cig,” she said. “You can control whether it’s better or worse for you.”

The Food and Drug Administration spent $36 million to tell America what these teenagers already know - “Smokeless Doesn’t Mean Harmless” - while failing to mention the lower health risks of smokeless tobacco, which the teens also seem well-informed about. …

Citing reviews that indicate cigarettes are at least 90 percent more harmful than smokeless tobacco, University of Buffalo Public Health professor Lynn Kozlowski and David Sweanor, of the University of Ottawa in Canada write that people have a fundamental right to know the dramatic differences in harm caused by various products.

“When so many smokeless users also smoke cigarettes - and do not know that cigarettes are much more harmful - it may promote their quitting smokeless and continuing smoking,” Kozlowski said in a news release.

“The FDA’s multi-million dollar campaign attacking smokeless tobacco is almost certainly leading to higher levels of disease by causing Americans to use far more hazardous cigarettes,” Sweanor stated.

Sweanor and Kozlowski also said the increasingly popular e-cigarettes and vaping can be part of the smokeless tobacco mix, as reports show they’re 95 percent less harmful than cigarettes. And the evidence is mounting. A new study finds the long term risks of e-cigs are far lower than combustible cigarettes.

The research, published Feb. 7 by the American College of Physicians, analyzed levels of nicotine, carcinogens and toxins in 181 current and former smokers who use e-cigarettes, nicotine replacement therapy or both. The study found similar nicotine levels across all groups - but significantly lower levels of cancer-causing chemicals and toxins, including a 97 percent reduction in a specific toxic chemical by those who use only e-cigarettes.

While the FDA may not be able to ignore the comparative benefits of e-cigarettes much longer, this new science isn’t likely to land e-cigs on the FDA’s list of approved smoking cessation products anytime soon. …

SOURCE: Kathy Hoekstra, Watchdog.org

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Michael Hamilton writes and edits for the liberty-minded clients of Good Comma Editing, LLC, a freelance writing and editing company.
media@heartland.org @MikeFreeMarket