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.

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• “Put simply, Congress acted without constitutional authority in enacting the Individual Mandate of the PPACA. In so doing, it has damaged Congress’ institutional legitimacy and has triggered severe conflicts between state and federal governments that the Constitution was carefully designed to avert.”
• “Because the Individual Mandate regulates a simple decision or choice not to purchase a particular product, it exceeds the proper scope of the Commerce Clause.”

The amicus brief was signed by:Sen. Mitch McConnell (R-KY), Sen. Orrin Hatch (R-UT), Sen. Lamar Alexander (R-TN), Sen. Kelly Ayotte (R-NH), Sen. John Barrasso (R-WY), Sen. Roy Blunt (R-MO), Sen. John Boozman (R-AR), Sen. Richard Burr (R-NC), Sen. Saxby Chambliss (R-GA), Sen. Daniel Coats (R-IN), Sen. Tom Coburn (R-OK), Sen. Thad Cochran (R-MS), Sen. Susan Collins (R-ME), Sen. Bob Corker (R-TN), Sen. John Cornyn (R-TX), Sen. Mike Crapo (R-ID), Sen. Jim DeMint (R-SC), Sen. Michael Enzi (R-WY), Sen. Chuck Grassley (R-IA), Sen. Dean Heller (R-NV), Sen. John Hoeven (R-ND), Sen. Kay Bailey Hutchison (R-TX), Sen. James Inhofe (R-OK), Sen. Johnny Isakson (R-GA), Sen. Mike Johanns (R-NE), Sen. Ron Johnson (R-WI), Sen. Jon Kyl (R-AZ), Sen. Mike Lee (R-UT), Sen. Richard Lugar (R-IN), Sen. John McCain (R-AZ), Sen. Jerry Moran (R-KS), Sen. Lisa Murkowski (R-AK), Sen. Rand Paul (R-KY), Sen. Rob Portman (R-OH), Sen. James Risch (R-ID), Sen. Pat Roberts (R-KS), Sen. Marco Rubio (R-FL), Sen. Richard Shelby (R-AL), Sen. Olympia Snowe (R-ME), Sen. John Thune (R-SD), Sen. Pat Toomey (R-PA), Sen. David Vitter (R-LA), Sen. Roger Wicker (R-MS).

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Mitt Romney has repeatedly said that if he were elected President he would issue an executive order that would give an ObamaCare waiver to every state and that would effectively repeal ObamaCare. The problem with this approach is that the EO would be unlawful. 

When Congress creates a law, agencies are required to implement the law as Congress has written. Now, Congress has routinely delegated certain authorities to the President, a Secretary or an Agency head allowing an official in the Executive Branch and this has included discretion as to how to implement a law and the power to promulgate regulations in furtherance of Congressional intent. Congress has also given the Secretary of HHS the express power to issue waivers, for example, related to a state's Medicaid program. 

As AHEC has previously explained, the problem with HHS's issuance of waivers under ObamaCare is that Congress did not give HHS any authority whatsoever to issue waivers related to the minimum coverage requirements of ObamaCare. Where, then, does HHS Secretary Sebelius derive her so-called "authority" to issue waivers? Contrary to federal law - she bestowed that power upon herself by issuing regulations that granted her that power. This is an unlawful grant of authority and the exercise of this authority is a direct violation of federal law (waivers have been issued for political purposes - to isolate groups from the affects of ObamaCare in advance of the 2012 election).

So, as Michael Cannon from CATO, explains the proposed RomneyCare waiver is equally unlawful. Cannon also explains an alternative that the next President could take that would dramatically undermine ObamaCare. Canon writes:

"there is one executive order that could effectively block ObamaCare, and that lies well within the president’s powers. The Obama administration has issued a proposed IRS rule that would offer 'premium assistance' (a hybrid of tax credits and outlays) in health insurance 'exchanges' created by the federal government. The only problem is, ObamaCare only authorizes these tax credits and outlays in 'an Exchange established by the State.' The administration did so because without premium assistance, ObamaCare will collapse, at least in states that do not create their own Exchanges. Yet the executive branch does not have the power to create new tax credits and outlays. Only Congress does. So if the final version of this IRS rule offers premium assistance in federal Exchanges, it will clearly exceed the authority that Congress and the Constitution have delegated to the executive branch. In that case, the next president could issue an executive order directing the IRS either not to offer premium assistance in federal Exchanges or to rescind this rule and draft a new one that does not."

UPDATE: The IRS has sent a letter to at least one Member of Congress saying it will move ahead and allow exchange subsidies to be handed out from federal exchanges (despite the clear lack of authority).

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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:

1. AHEC's Blog: The Connection of the HCC to Efforts to Enact Socialized Medicine
2. AHEC's Blog: The HCC will lead to Taxpayer Funding of Abortions and Free HealthCare for Illegal Aliens
3. A Line of Sight: A Conservative Assessment of the HCC

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).

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Earlier this week, David Frum wrote an article in which he essentially urged the GOP to accept ObamaCare but with some minor tweaks. Michael Cannon with The Cato Institute has deconstructed Frum's article to explain why Frum's idea is not just bad policy but completely unworkable and that it simply can't be fixed.

Cannon sums up Frum's "plan" as follows: "Frum’s GOP-palatable alternative to ObamaCare is … ObamaCare. But maybe more coercive. And implemented sooner. With higher taxes. And less vulnerable to legal challenges. And with Republicans playing the bad guy."  AHEC's applauds Cannon's insight into the issue.

You can read Cannon's full article here.

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