Wednesday, January 14, 2015

Fog. Dog. Cog.

If there is anything that gets the average American riled up it is seeing Congress pass legislation while exempting themselves from the law the rest of us have to live under.

A few examples of legislation passed over the years that Congress exempted itself from have included Social Security, the Fair Labor Standards Act, the Civil Rights Act, insider trading statutes and many laws regulating the American workplace. This article provides some background on how Congress has put itself above the law over the years.

As the Obamacare statute was being drafted, Congress did not want to open itself to similar criticism regarding this statute, so a provision was inserted into the law that reads as follows:

The only health plans that the Federal Government may make available to Members of Congress and congressional staff with respect to their service as a Member of Congress or congressional staff shall be health plans that are — (I) created under this Act (or an amendment made by this Act); or (II) offered through an Exchange established under this Act (or an amendment made by this Act).

That is pretty clear and simple. Congress members and their staff should receive their healthcare through the Obamacare exchanges. The problem arises because the exchanges do not have any procedures for handling premium contributions from large employers.Therefore, the implication is that those in the exchanges must pay the full cost of their health care cost coverage individually. Oops!

When all of this dawned on our elected legislators they were in full panic mode as they realized that they would have to use the Obamacare healthcare exchanges to access their healthcare coverage in 2014 as well as pay the full cost of the coverage.  There was talk behind the scenes of a bipartisan effort to repeal this part of Obamacare until howls on both the right and left caused both John Boehner and Harry Reid to distance themselves from the idea.

Being required to get their health care in the Obamacare exchanges presents two problems for Congress.  First, it puts individuals who have been getting their coverage on a group basis into what is essentially an individual marketplace.  It takes what have been group community rates for that coverage and makes it individually-rated coverage based on age.

The bigger problem is that the legislation as passed does not allow the healthcare exchanges to accept any employer subsidy money to purchase healthcare coverage.  Government employees generally pay 25% of the cost of their health care coverage currently. The remaining 75% is paid (tax-free) by the federal government as employer-provided health coverage.  Therefore,Congress and their staffers would have to pay for the entire cost of their health care coverage with their own after-tax dollars under Obamacare  Ouch!

In order to get around this, Congressional leaders went to the Federal Office of Personnel Management and got a ruling that Congress was a "small business" that allowed more than 12,000 congressional employees, their spouses and dependents to purchase health insurance from the District of Columbia's small business exchange.

An accommodative D.C. government allowed Congress to come into their small business exchange.

There was only one big problem with this. Under the Obamacare law a small business is defined as a business with less than 50 employees. 12,000 seems to be a little more than 50, don't you think?

Why was it so important for Congress to be defined as a small business and use the D.C. small business exchange?  That allowed it to provide the tax-free subsidy and to also continue to use community rating for the employee rates rather than age specific rates. It was the only way to keep members of Congress and their staffs out of the individual Obamacare exchanges.

Judicial Watch filed a lawsuit last October to stop this clear violation of the law.

Judicial Watch announced last week that in response to this legal action the District of Columbia has conceded that Congress is not an eligible "small business" for purposes of purchasing health insurance through the Small Business Exchange.  However, the District went on to argue that "the Office of Personnel Management (OPM) could override the District’s laws (and, implicitly the Affordable Care Act)."

All of this is pretty amazing when you think for the federal government to prevail in this case you have to believe that a federal bureaucrat  has the power to not only override D.C law but also a law passed by Congress and signed by the President.

The case is even more shocking when you find out that someone in both the House and the Senate knowingly filed fraudulent documents claiming that both had fewer than 50 employees in claiming they were eligible for the small business exchange. Tom Fitton of Judicial Watch explains.

Our lawsuit cites applications filed by the U.S. House of Representatives and Senate with the D.C. Exchange Authority.  The applications, which were obtained through a Freedom of Information Act (FOIA) request, show that the House and Senate claimed to have only 45 employees each.  They also show that the House and Senate attested to having “50 or fewer full-time equivalent employees.”  Congress employs upwards of 20,000 people.  D.C. law limits participation in the exchange to small businesses having fewer than 50 full-time employees.  The applications also falsely state that the House and Senate are “local/state governments.”  The “electronic signature” section of the application includes the following language: “I’ve provided true and correct information to all the questions on this form to the best of my knowledge.  I know that if I’m not truthful, there may be a penalty.”

At the same time all of this is going on we are also getting close to oral arguments in King v. Burwell
which will be argued before the U.S. Supreme Court on March 4. The King case challenges the federal government's right to provide subsidies to individuals who enroll in Obamacare in the exchange managed by the federal government.

The reasoning is simple--the literal words of the statute state that subsidies are only available to Americans who enrolled in Obamacare "through an exchange established by the state".

Out of the 50 states and D.C., only 14 states are totally running their own insurance exchange. Therefore, if subsidies are only legal in those states, Obamacare is fatally flawed (as if we did not already know that).

What is incredible is that a statute that potentially could affect 1/6 of the U.S. economy could have been so sloppily written and that is causing so many people in Washington to spend so much time in trying to ignore the law that they wrote.

It truly does seem that Rep. Nancy Pelosi was right when she said right before the bill was voted on.

Unfortunately, we are still in a fog. The fog is not caused by controversy but because everybody is bogged down by a dog of a bill that makes the American people feel like cogs in a gigantic machine.

And every time the fog lifts we see the people in control of the machine are shysters playing shenanigans with the rule of law.

Justice Scalia, where are you?

(See "How Scalia Could Kill Obamacare" using his "textualism" approach that argues for a literal legal interpretation of statutes)

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