Are there many ways that a state could shield businesses in their state from an onerous, job killing tax penalty? In most cases - no. But in the case of ObamaCare the answer is a definitive "yes!!!"
ObamaCare seeks to have states set up insurance exchanges or government controlled "markets" whereby federal subsidies are dolled out so that people can buy heavily regulated, government approved health insurance. According to this article from The Wall Street Journal, if a state establishes an exchange, ObamaCare allows the subsidies to be given out (see Section 1311). If a state refuses to set up an exchange, the federal government will do so but ObamaCare does not permit any subsidies for people who access the federal exchanges (see Section 1321).
So, a state that takes a pass on establishing an exchange (as many states have chosen to do) is effectively telling the feds, "we aren't going to spend state tax dollars to do your dirty work - have at it." But here is where a state that decides to take a pass can really benefit that state's economy. Under ObamaCare, if someone receives an exchange subsidy, their employer is subject to a penalty under ObamaCare but if no employees receive a subsidy employers are not subject to the penalty. Get it? The bottom line is that states can protect job creators from onerous federal taxes if they refuse to create and set up an ObamaCare insurance exchange. That is a significant incentive for states to protect their economy and jobs. The alternative is to create an exchange, letting the penalty kick in, resulting in fewer businesses and fewer jobs which will create a double-whammy for state taxpayers. Taxpayer will have to foot the bill to deal with the further strain on a state's social safety net resulting from higher unemployment and would end up footing the bill to finance a system to hand out federal bennies. A bad deal all around for states, employers, employees and taxpayers.
Read more about this here.
Be sure to follow AHEC on Twitter @TheAHEC and at Facebook.com/TheAHEC
Be sure to follow AHEC on Twitter @TheAHEC and at Facebook.com/TheAHEC.
Every single candidate running in the Republican Presidential Primary should be talking about what is wrong with ObamaCare (well, except maybe for MItt Romney that is). It fits with the Republican Party's election year narrative. Job-Killing Taxes? Check! Over Regulation? Check! Size and Scope of Government? Check! So why aren't the candidates talking about it?
Michael D. Tanner with CATO has more to say on the subject. You can read his commentary here.
Be sure to follow AHEC on Twitter @TheAHEC and at Facebook.com/TheAHEC.
AHEC has recently completed an extensive fiscal and policy review of the Health Care Compact (HCC or compact), legislation that has been introduced in several states. The conclusion of our fiscal review of the HCC is that the compact's funding formula is fatally flawed and that it will shift $3 trillion of healthcare liabilities from the federal government onto the backs of the states. Our report even provides a break down of the fiscal shortfall that will be created in each state if the compact were to be widely adopted.
Ironically, the group pushing the HCC has confirmed AHEC's $3 trillion figure but has failed to inform state legislators of how this will impact their state's budget. It would be the height of fiscal irresponsibility for a state to pass the compact given the obvious flaws in the funding formula, particularly if a state does not have a plan in place to ensure that the state's most vulnerable citizens will not receive proper health care. Yet some states (Texas, Oklahoma, Georgia and Missouri) have done just that.
READ AHEC'S FULL REPORT ON THE HCC HERE.
AHEC has previously discussed the myriad of problems with the Health Care Compact. You can read much of AHEC's previous work on the HCC in the following places:
If you are concerned about the implications of the Health Care Compact, please call your state legislators (especially in Tennessee, Wisconsin, Florida, Ohio, Pennsylvania and Michigan and tell them to oppose the Health Care Compact).
Be sure to follow AHEC on Twitter @TheAHEC and at Facebook.com/TheAHEC.
Among the more ridiculous claims by the Health Care Compact Alliance (HCCA) is the idea that the Health Care Compact (HCC or compact) will allow states to negate, nullify or ignore ObamaCare's individual mandate. The Frequently Asked Questions section of the HCCA's website states the following:
"How is the Patient Protection and Affordable Care Act (“Obamacare”) effected by the Health Care Compact?
The Health Care Compact renders Obamacare inoperable in states that join and pass replacement legislation. It is not, strictly speaking, repeal. It just allows member states to suspend its operation their states. The Health Care Compact creates a "regulatory shield" for states to free them from federal regulations, giving them the ability to design their own system. It does this by:
1. Giving member states primary responsibility for healthcare regulation
2. Making state healthcare laws supersede federal healthcare laws
These provisions, taken together, allow states to render Obamacare ineffective in states that join the Health Care Compact."
The suggestion is that by adopting the compact, a state can undo the individual mandate. The clear language of the compact suggests otherwise. The actual language of the compact provides states can “suspend” the operation of “federal laws, rules, regulations, and orders regarding Health Care.”
In order to ascertain if the Compact's language would affect the individual mandate, one first has to understand exactly how federal law treats the individual mandate. ObamaCare's individual mandate is codified as part of the tax code - it requires the reporting of health insurance information on your tax return and the individual mandate assesses a penalty when an individual pays their taxes on April 15.
The tax code is Title 26 of the United States Code (commonly called the "Internal Revenue Code"). By contrast, most of Medicare, Medicaid and other areas of health care laws are located in Title 42 of the United States Code (the "Public Health & Welfare Code").
The individual mandate is really not part of health care law at all, its part of the tax code. The language of the compact purports to give states power over health care law but says nothing about federal tax law. Therefore, one has to necessarily conclude that even under the best of circumstances that the states will not be able to "suspend" the individual mandate under the Compact.
When it comes to the individual mandate, advocates of the HCC are over-promising and the compact will certainly under-deliver. These are facts the HCCA would most certainly find very inconvenient.
But that is not where the analysis should end. If one buys the HCCA's rhetoric that the HCC is about "who decides," President Obama has already given his answer in the form of ObamaCare and it is unmistakeable that his answer is the federal government will decide. The simple reality is that if President Obama is re-elected in 2012, subsequent repeal of ObamaCare, or adoption of the compact for that matter, becomes impossible. The danger with the HCC is that it is ignores the reality that 2012 is critical to the defeat of ObamaCare. The compact is proving to be nothing more than a distraction for Tea Party and other conservative activists who should be working to build the mechanics necessary to win in 2012 (rather than pursuing academic theories that won't have its intended effect). In this regard, the HCC amounts to nothing more than a missed opportunity that could actually entrench, rather than undermine, ObamaCare.
Be sure to follow AHEC on Twitter @TheAHEC and at Facebook.com/TheAHEC.
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