Why We Need the Minimum Coverage Mandate
A district court judge in Virginia ruled on December 13 that the “minimum coverage” requirement in the Affordable Care Act is unconstitutional. The opinion is clearly at odds with other rulings in Virginia and in Michigan, where courts upheld the law.
Judges may disagree, but there’s a consensus among legal and economic scholars that this requirement to purchase health insurance is essential to making health insurance available and affordable to everyone, without regard to health status or “pre-existing conditions.” Without this provision, the law is unworkable and the consumer protections it provides become unenforceable. As the issue wends its way through the courts, it is useful to review why this requirement is in the law and the valuable protections we have to lose if it’s eviscerated.
Today, limited affordable coverage in the small business and individual markets reflects the fact that purchasing health insurance is totally voluntary. Given that health insurance is expensive relative to family or small business incomes, people are reluctant to purchase protection unless and until they need health care. If people who need health care come to dominate an insurer’s policyholders, then insurance can no longer spread or “pool” risk—collect premium dollars from a broadly healthy group of purchasers to distribute to the minority among them who need costly care. For this reason, health insurers do everything they can to screen out or deny protection to people with care needs. The Affordable Care Act ended those practices.
Opponents of the Affordable Care Act claim we can change this behavior without a requirement that people buy health insurance, and simply prohibit insurers from denying health insurance based on pre-existing conditions. But states have tried and failed in this approach. Several states tried what are called “community rating reforms”—requiring health insurers to offer policies within a given area at the same price to all persons without medical underwriting. The result: dramatic increases in insurance prices and a rapidly shrinking insurance market. In other words, the markets failed.
The lesson—incorporated in the Affordable Care Act—is that effective insurance markets require not only requirements on insurers, but requirements that people buy insurance along with subsidies to make insurance affordable. All three legs of this three-legged stool are critical to effective health insurance.
What happens if requirement to purchase coverage is removed as Judge Henry Hudson ruled? One of us has estimated the effects using a microsimulation model similar to that used by the Congressional Budget Office to estimate the Affordable Care Act’s effects. The results are striking. Eliminating the minimum coverage provision would increase the average individual premium by 27 percent in 2019 and reduce the expansion of insurance coverage by three-quarters, from 60 percent to 12 percent of the 55 million people uninsured in 2019.
Removing the mandate would at the same time dramatically alter the “bang for the buck” in federal spending. While removing the mandate cuts the legislation’s coverage gains by more than 75 percent, it would reduce the spending by less than a quarter—as subsidies are increased to cover the higher premiums for the more modest number of the sicker uninsured who are most likely to participate.
Judge Hudson’s decision may be good politics but the policy implications will be devastating for millions of Americans. His decision jeopardizes putting affordable coverage out of reach for those who cannot find it now, especially those with pre-existing conditions. The Affordable Care Act seeks to improve our nation’s health system; Judge Hudson’s decision makes it worse.
By: Jonathan Gruber and Judy Feder-Jonathan Gruber is a professor of economics at the Massachusetts Institute of Technology and Judy Feder is a Senior Fellow at the Center for American Progress; Center For American Progress-December 14, 2010
The Forgotten Accomplishments of The 111th Congress
It’s already been pointed out endlessly that the 111th Congress has been one of the most productive in decades. But here’s another way to look at it: Consider all the things this Congress has accomplished that we aren’t talking about.
Health care reform, the overhaul of Wall Street regulations, the ratification of New START and the repeal of don’t ask don’t tell are, of course, the accomplishments that will define this Congress in the history books. But there are a whole host of other relatively under-the-radar achievements that in and of themselves would normally be considered major achievements, had they not been completely overshadowed by the big ticket items.
Before we all depart for the holidays, let’s pause for a moment of reflection on these also-ran accomplishments, some of which passed with broad bipartisan support. There’s the Lily Ledbetter fair pay act, which reversed a Supreme Court decision limiting the ability of women to sue over salary discrimination. There’s the sweeping credit card reform measure putting a halt to unfair and deceptive industry practices. There’s the landmark legislation that greatly expanded the FDA’s authority to regulate the manufacturing and marketing of tobacco products.
There’s the largely forgotten measure that vastly expanded Federal aid to college kids that ultimately passed as part of health reform. More visibly, there is the food safety bill and the measure granting health benefits to 9/11 responders, both of which passed this month. And two women were confirmed to the Supreme Court, one of them a Latina — a historic accomplishment.
This is only a partial list.
Under normal circumstances, these alone would have constituted significant achievements. “When you look beneath the surface just a little bit there’s an enormous amount that under normal circumstances would have been heralded but got very little attention,” Congressional scholar Norm Ornstein tells me.
The larger story here, though, is that if you add in these accomplishments with the more visible ones, it becomes clear that Congress has expanded government’s reach even more than commonly thought. For all the justifiable criticism of health and Wall Street reform for not going far enough — and for all the talk about the coming battle to repeal them — the bigger story is that the sum total of this Congress’s major and minor achievements have produced an expansion of government’s role in society that will be very hard to undo.
“Taken together, the smaller accomplishments may have an impact on society that rivals the main accomplishments, and they have all bolstered government’s role as a protector of the public interest,” Ornstein says.
And so, one more tip of the hat to the 111th Congress and its leadership.
By Greg Sargent -The Plum Line, Washington Post- December 23, 2010
Smoothe Sleighing and Merry Christmas!
What a year 2010 has been in the political arena. From moose sightings to lipstick on a pig, back stabbings to politicians left for dead, dead ducks to lame ducks, from doing nothing to finally doing something…. political junkies could not have asked for a more tumultuous and interesting year. I’m sure that at some point, someone will want to “repeal” it. Be that as it may, as we come to the close of 2010 and look to the promises of the future…here’s hoping all of you the very best. ..click and enjoy: http://www.jacquielawson.com/preview.asp?cont=1&hdn=0&pv=3274602&path=83563
Posted By: raemd95-December 23, 2010 -Card By: Jacquie Lawson-jacquielawson.com
John McCain & Lindsey Graham: The Mean Girls of the U.S. Senate
I have a theory about human social evolution: life doesn’t progress much after high school. This week, I can thank John McCain and Lindsey Graham for providing empirical data that supports this hypothesis.
Here’s how government should work: lawmakers ponder the great issues of the day in serious manner and then decide, according to their own beliefs and values, which policies are best for their constituents and the public. But in the past few days, we’ve seen government-by-hissy-fit, with Sens. McCain and Graham, the Batman and Robin of cranky self-proclaimed GOP mavericks, placing personal petulance ahead of the common good.
As the Senate on Saturday was in the process of repealing the “Don’t ask, don’t tell” policy that bans out-in-the-open gays and lesbians from serving in the military, McCain practically threw a tantrum on the Senate floor, decrying “this bizarro world” and denouncing senators in favor of repeal for “acting in direct repudiation of the message of the American people.” (Never mind that most polls show majority support for repealing DADT.) Looking as if steam would shoot out of his ears at any moment, McCain went on to exclaim that ending DADT would endanger “the survival of our young men and women in the military.”
Them are fighting words. But what made McCain’s over-the-top performance so bizarro itself was that only four years ago he had said that he would back repeal if military leaders endorsed it — and now the secretary of defense and the chairman of the joint chiefs of the military were supporting the change. Not only had McCain flip-flopped, he had become an angry crusader, seemingly full of rage at a policy initiative he once quasi-endorsed. How to explain this? It seemed more personal than policy — as in he really doesn’t fancy seeing a victory for President Obama, the fellow who prevented McCain from becoming BMOC.
Graham’s behavior was more outlandish. On Sunday, the South Carolina Republican said that he wouldn’t vote for the START treaty that will reduce U.S. and Russian nuclear arms because “this lame duck [congressional session] has been poisoned.” And what poisoned it? In part, Graham said, it was the passage of the “Don’t ask, don’t tell” repeal. Here was a U.S. senator saying he wouldn’t take up the critical issue of nuclear nonproliferation because he was peeved by the repeal of DADT, which sailed through on a 65-to-31 vote. Governing via tantrum?
It gets worse. The day before the Senate overturned DADT, Graham was complaining that the workload in the Senate was too much for him and he was too close to physical collapse to handle a vote on START:
It’s been a week from hell. It’s been a week where you are dealing with a lot of big issues from taxes to funding the government to special interest politics. And I’ve had some to think about START but not a lot and it’s really wearing on the body.
Poor Graham. Many Americans work more than one job just to feed their family and to keep from being tossed out of their home. Yet he was bellyaching about some end-of-the-year heavy-lifting that was occurring because the Senate, partly due to GOP obstructionism, had not finished its important business. By the way, the START treaty was signed by the United States and Russia in April; that had allowed Graham and other senators plenty of time to think about it. (Previous START pacts were ratified by the Senate after much less time for Senate consideration.) Graham was whining. Two words: man up.
And it gets worse. On Monday, the Huffington Post reported that early last week, McCain and Graham had tried to cut a deal with the White House: they offered to deliver enough GOP votes to ratify the START treaty, if Obama and the Democrats would sideline any vote on DADT. The White House said no, thanks. But this was a cynical maneuver on the senators’ part: if you don’t give us what we want (no DADT repeal), we won’t give you something you want (START ratification). Forget about the merits of the treaty. McCain and Graham, who fashion themselves serious students of national security, were engaged in playground politics concerning a nuclear arms treaty. They were willing to vote for it — only if the White House would appease them. The substance didn’t matter.
When McCain and Graham didn’t get their way, Graham groused he was too overwhelmed to deal with the treaty, and McCain tried to kill the agreement by offering an amendment that would force the United States and Russia to renegotiate the pact. The Senate rejected his amendment on Saturday. Which probably irritated the hell out of him. On Monday, Brent Scowcroft, who was national security adviser for President George H.W. Bush and who supports START ratification, accused McCain of assailing the treaty because of his anger over the repeal of DADT: “To play politics with what is in the fundamental national interest is pretty scary stuff.” I look forward to McCain yelling at Scowcroft to get off his lawn.
But McCain and Graham have not merely been grumpy old men. They have been behaving like mean girls — hatching plots, acting spoiled, wallowing in self-absorption and melodrama, and having cows when they don’t win. It’s a sorry spectacle, especially because both men in the past have tried to be reasonable adults within the Senate. Now they’re embarrassing themselves, as they flail about in a puddle of pique. The best news for them is that within days, school will be out.
By: David Corn, Washington Bureau Chief , Mother Jones Magazine; Politics Daily, December 21, 2010
Tax Hike Prevention Act of 2010: How It Affects You
Now that President Obama has signed the Tax Hike Prevention Act of 2010, taxpayers will have some certainty about their tax situation, if only for the next 24 months.
The new law contains a bevy of tax breaks — new and extended — and emergency help for the jobless. Its cost over 10 years is estimated at $858 billion.
Here’s a rundown of some of the biggest ticket items that will affect individuals. (Except where noted, all provisions are for 2011 and 2012).
Extended income tax rates: $207.5 billion. The six federal income tax rates will remain at the same levels they are today: 10%, 15%, 25%, 28%, 33% and 35%. In addition, itemized deductions will continue to be allowed in full for high-income taxpayers.
AMT fix: $147 billion. More than 20 million tax filers will be protected from having to pay the so-called “wealth tax,” otherwise known as the Alternative Minimum Tax. For tax year 2010, the bill will raise the amount of income that is exempt from the reach of the AMT to $47,450 for individuals and to $72,450 for couples filing jointly. In 2011, those exemption amounts will increase to $48,450 and $74,450 respectively. In addition, the bill will allow taxpayers to apply nonrefundable credits (which reduce one’s tax bill dollar for dollar) to their tax liability — whether under the AMT or the regular tax code.
Social Security tax break: $112 billion. Workers will get a 2 percentage-point break on their payroll tax for one year. Instead of paying 6.2% on wages up to $106,800, they will only have to pay 4.2% in 2011. This tax break replaces the Making Work Pay credit, which expires this year. Unlike Making Work Pay, which was limited to workers making less than $75,000 ($150,000 for couples), the payroll tax holiday will be available to everyone who pays into Social Security.
Expanded child tax credit: $90 billion. The bill will retain the $1,000 child tax credit (up from $500 before the Bush tax cuts). It also will retain the reduced-earnings threshold, which allows more people to claim the credit as refundable. A refundable tax credit is one paid to a tax filer even if the value of the credit exceeds his tax liability. So if a filer doesn’t owe any federal income tax but qualifies for the credit, it is paid to him in the form of a refund.
Smaller estate tax: $68 billion. Barring any changes, the estate tax in 2011 and 2012 will be reinstated at an exemption level of $1 million and a top rate of 55%. But under the bill, the exemption level will be raised to $5 million and the top rate lowered to 35%. The legislation will also reinstate the so-called “step up in basis” for beneficiaries of those who die in 2010, 2011 or 2012. A stepped-up basis means that when someone sells an inherited asset, his capital gains tax bill will be based on the asset’s price the day he inherited it, rather than when the decedent originally bought it. Practically speaking that means the beneficiaries of those who died in 2010 will be allowed to choose which estate tax rules to follow — those of 2011 or those of 2010. Under 2010 rules, there is no estate tax but also no step-up rules; there is only an option to exempt $1.3 million worth of capital gains from tax.
Help for the jobless: $57 billion. The unemployed will get a 13-month extension of the deadline to file for additional unemployment benefits — which go as high as 99 weeks in states hit hardest by job loss.
Extended investment tax rates: $53 billion. Everybody will get to keep their low investment tax rates for the next two years. For most people, that means their qualified capital gains and dividends will continue to be taxed at 15%. Low-income tax filers (those in the 10% and 15% brackets), however, will continue to enjoy a 0% tax rate on their capital gains or dividends.
Marriage penalty relief: $27 billion. Marriage will still be hard (sorry), but not because less-than-wealthy two-earner couples will owe more to the IRS than they did when they were single. The bill continues to ensure that the standard deduction for couples is exactly twice that for single filers. It also maintains an expanded 15% tax bracket so that the amount of income in that bracket for joint filers is exactly double that for single filers.
Expanded college credit: $18 billion. Paying for college tuition in 2011 and 2012 will be made a bit easier with the retention of the American Opportunity tax credit, which is an expansion of the HOPE tax credit. The Opportunity credit is worth up to $2,500 (up to 100% of the first $2,000 spent and up to 25% of the next $2,500), and it may be claimed for four years’ worth of college. Eligibility to take the credit is limited to those with modified adjusted gross income below $90,000 ($180,000 for couples filing jointly).
Individual tax break extensions: Costs vary. The legislation will extend a number of tax breaks that have been introduced in the past few years such as the option to deduct on one’s federal return state and local sales tax instead of state and local income tax — at a cost of $6 billion. Also, it will extend a deduction for qualified tuition and other education-related expenses at a cost of $1.2 billion. Less pricey extensions include a break for teachers to deduct up to $250 in classroom expenses (just under $400 million).
By: Jeanne Sahadi, Senior Writer-CNNMoney.com, December 17, 2010
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