Appeals court panels issue split decision on Obamacare

[sactoking]

Well, if the coverage is provided by employer, then employees don't have to go to the exchange and get a subsidy in the first place.
So basically, corporations that we are now told have morals and religions, are suing to deny tax subsidies to help with insurance for employees they themselves refuse to provide health insurance for, and for tens of millions of other Americans who have nothing to do with their companies.

In all fairness, there can be legit scenarios where an employer could get trapped by the penalty without being "heartless."

If the cost of the employees contribution to health insurance for employee-only coverage exceeds 8% of income, then the employer-sponsored coverage is considered "unaffordable" and the employee is eligible for a tax credit, thus triggering the employer penalty.

Imagine, if you will, a small law firm in Las Vegas. The firm has been around for a while and is a nice place to work, so there is very little turnover among employees; many of them have been there for decades. Several of the partners are still practicing well into their 80s. The firm employs ~70 people, all full-time, and is looking to buy a group health plan that it will offer starting January 1, 2014. Things are going well, the partners want to offer everyone gold level coverage, and the firm will pick up 50% of the premium cost.

The most common form of group premium rating nowadays is modified composite rating, where the insurer creates an average characteristic profile of the employees, which leads to a per-employee premium. Multiply by the number of employees and, voila, total premium owed is known.

Every employee of the firm is in Las Vegas and the firm has a strict no-tobacco policy. The only variable then is age; average employee age if ~55 years old. This leads to a modified composite premium of ~$540 per person, with the employee paying $270 per month.

In March one of the admin folks retires and the partners decide that he'll be replaced with a high school graduate (they prefer to train in-house). Given the entry-level nature of the position a hire is made at $15 per hour in April. The new hire goes through a 30 day orientation and it looks like he'll work out just fine, so he's made permanent in May. In August the new admin becomes eligible for the insurance plan and declines coverage. In 2015 the firm gets a tax bill for an employer penalty.

When the new employee joined, his premium was $540 due to the modified composite rating. That he was 30 years younger than the average age didn't matter; once the plan is issued the composite is locked in for all employees who join during the plan year. That means that the employees $270 per month share of the premium constituted ~11% of his income. When he was offered insurance he declined because it met the definition of unaffordable and got an individual policy through the exchange. Since his annual income puts him at ~250% FPL, he got an individual tax credit, meaning he saved $30 per month on his premiums. The company was ultimately responsible for that $30.

 

[theeedude]

Employers have to* provide coverage regardless. The issue is the monetary penalty. The payment of the monetary penalty, be it the flat amount or the reimbursement of the tax credit, is tied to whether or not an employee qualifies for a tax credit. No tax credit, no monetary penalty. If the exchange is illegally providing tax credits to ineligible individuals, as is alleged in the lawsuits, then the employers are being illegally exposed to a monetary penalty that they are not supposed to be subject to.

*: Per the usual qualifications

So that is their standing? We are planning to break the law and not provide our employees with insurance, and we are suing to make sure the government doesn't remedy the result of our law breaking with a health insurance subsidy, because then it could charge us a penalty.

 

[dank69]

In all fairness, there can be legit scenarios where an employer could get trapped by the penalty without being "heartless."

If the cost of the employees contribution to health insurance for employee-only coverage exceeds 8% of income, then the employer-sponsored coverage is considered "unaffordable" and the employee is eligible for a tax credit, thus triggering the employer penalty.

Imagine, if you will, a small law firm in Las Vegas. The firm has been around for a while and is a nice place to work, so there is very little turnover among employees; many of them have been there for decades. Several of the partners are still practicing well into their 80s. The firm employs ~70 people, all full-time, and is looking to buy a group health plan that it will offer starting January 1, 2014. Things are going well, the partners want to offer everyone gold level coverage, and the firm will pick up 50% of the premium cost.

The most common form of group premium rating nowadays is modified composite rating, where the insurer creates an average characteristic profile of the employees, which leads to a per-employee premium. Multiply by the number of employees and, voila, total premium owed is known.

Every employee of the firm is in Las Vegas and the firm has a strict no-tobacco policy. The only variable then is age; average employee age if ~55 years old. This leads to a modified composite premium of ~$540 per person, with the employee paying $270 per month.

In March one of the admin folks retires and the partners decide that he'll be replaced with a high school graduate (they prefer to train in-house). Given the entry-level nature of the position a hire is made at $15 per hour in April. The new hire goes through a 30 day orientation and it looks like he'll work out just fine, so he's made permanent in May. In August the new admin becomes eligible for the insurance plan and declines coverage. In 2015 the firm gets a tax bill for an employer penalty.

When the new employee joined, his premium was $540 due to the modified composite rating. That he was 30 years younger than the average age didn't matter; once the plan is issued the composite is locked in for all employees who join during the plan year. That means that the employees $270 per month share of the premium constituted ~11% of his income. When he was offered insurance he declined because it met the definition of unaffordable and got an individual policy through the exchange. Since his annual income puts him at ~250% FPL, he got an individual tax credit, meaning he saved $30 per month on his premiums. The company was ultimately responsible for that $30.

That's a very specific set of circumstances to arrive at a very insignificant penalty.

 

[theeedude]

In all fairness, there can be legit scenarios where an employer could get trapped by the penalty without being "heartless."

If the cost of the employees contribution to health insurance for employee-only coverage exceeds 8% of income, then the employer-sponsored coverage is considered "unaffordable" and the employee is eligible for a tax credit, thus triggering the employer penalty.

Imagine, if you will, a small law firm in Las Vegas. The firm has been around for a while and is a nice place to work, so there is very little turnover among employees; many of them have been there for decades. Several of the partners are still practicing well into their 80s. The firm employs ~70 people, all full-time, and is looking to buy a group health plan that it will offer starting January 1, 2014. Things are going well, the partners want to offer everyone gold level coverage, and the firm will pick up 50% of the premium cost.

The most common form of group premium rating nowadays is modified composite rating, where the insurer creates an average characteristic profile of the employees, which leads to a per-employee premium. Multiply by the number of employees and, voila, total premium owed is known.

Every employee of the firm is in Las Vegas and the firm has a strict no-tobacco policy. The only variable then is age; average employee age if ~55 years old. This leads to a modified composite premium of ~$540 per person, with the employee paying $270 per month.

In March one of the admin folks retires and the partners decide that he'll be replaced with a high school graduate (they prefer to train in-house). Given the entry-level nature of the position a hire is made at $15 per hour in April. The new hire goes through a 30 day orientation and it looks like he'll work out just fine, so he's made permanent in May. In August the new admin becomes eligible for the insurance plan and declines coverage. In 2015 the firm gets a tax bill for an employer penalty.

When the new employee joined, his premium was $540 due to the modified composite rating. That he was 30 years younger than the average age didn't matter; once the plan is issued the composite is locked in for all employees who join during the plan year. That means that the employees $270 per month share of the premium constituted ~11% of his income. When he was offered insurance he declined because it met the definition of unaffordable and got an individual policy through the exchange. Since his annual income puts him at ~250% FPL, he got an individual tax credit, meaning he saved $30 per month on his premiums. The company was ultimately responsible for that $30.

So pay employees more or offset more of their premium so it falls under 8%. And if you don't, then pay a penalty. It's $3000/year, which is less than $270 per month the company was spending to provide the coverage.
Don't sue to stop your employee from getting help from the government after you refused to provide him with affordable insurance.

 

[sactoking]

The mechanics are trickier than "just pay more." Is the employee married? Does the spouse earn an income? Does the employee have taxable capital gains? Etc. An identical hypothetical scenario in which the employee is married and the spouse also makes $15/hr would mean the employer doesn't pay the penalty. The only way to ensure that the wage is high enough to make the coverage affordable is to ask questions which are considered illegal or ill-advised to ask.

The characterization of the lawsuit itself can be easily biased. "ue to stop your employee from getting help from the government after you refused to provide him with affordable insurance" is one way to put it. "Sue to stop the government from illegally fining me" is another way. If you're caught speeding by a sheriff in the wrong jurisdiction, should you still pay the ticket? Some would say you shouldn't have been speeding at all, others would say that your guilt doesn't expose you to illegal punishment.

 

[Hayabusa Rider]

There is no conflict of interpretation in this case. The issue is wholly made up. Courts generally do use legislative intent in interpreting laws when there is an obvious drafting error. And no one can argue that this wasn't the intent of those who drafted the law.

Again, republicans who scoff at judicial activism, when they can't win seats to get laws passed turn to judicial activism.

Well I never went to law school unlike you so I cannot claim expertise in this specific case. It does seem however that someone is examining this issue at the judicial level and I believed it was none of us.

 

[theeedude]

The mechanics are trickier than "just pay more." Is the employee married? Does the spouse earn an income? Does the employee have taxable capital gains? Etc. An identical hypothetical scenario in which the employee is married and the spouse also makes $15/hr would mean the employer doesn't pay the penalty. The only way to ensure that the wage is high enough to make the coverage affordable is to ask questions which are considered illegal or ill-advised to ask.

The characterization of the lawsuit itself can be easily biased. "ue to stop your employee from getting help from the government after you refused to provide him with affordable insurance" is one way to put it. "Sue to stop the government from illegally fining me" is another way. If you're caught speeding by a sheriff in the wrong jurisdiction, should you still pay the ticket? Some would say you shouldn't have been speeding at all, others would say that your guilt doesn't expose you to illegal punishment.

It's more like speeding, injuring someone, then suing the government to not allow it to send an ambulance because you'd have to pay for it.
The whole reason the government would provide a subsidy on the exchange is because the employer didn't provide affordable coverage as required by law. It would then ask for a small penalty to offset some of that cost. Not even the whole cost, just $3K of it. And corporations are suing the government to stop it from providing a subsidy to remedy a situation caused by the corporation itself breaking the law. And of course Republicans are cheering it on.

 

[theeedude]

But let's get to the practical implications of repeal of the subsidies.
Many people in the states without exchanges will be exempt from the mandate, but insurers will not be exempt from medical underwriting ban. So people will wait till they are sick to get coverage. So not only are the people in those states going to be subsidizing other states with their tax money without getting Medicaid or subsidy dollars, they are going to get hit with huge health insurance bills, and insurers will pull out of their markets entirely. How long before they fold and start an exchange and accept Medicaid expansion? I give them 6 months.

 

[emperus]

Well I never went to law school unlike you so I cannot claim expertise in this specific case. It does seem however that someone is examining this issue at the judicial level and I believed it was none of us.

Yes someone is. Here is a piece of the ruling that I found telling.

We conclude that appellants have the better of the argument: a federal Exchange is not an “Exchange established by the State,” and section 36B does not authorize the IRS to provide tax credits for insurance purchased on federal Exchanges. We reach this conclusion by the following path: First, we examine section 36B in light of sections 1311 and 1321, which authorize the establishment of state and federal Exchanges, respectively, and conclude that section 36B plainly distinguishes Exchanges established by states from those established by the federal government. We then consider the government’s arguments that this construction generates absurd results but find that it does not render other provisions of the ACA unworkable, let alone so unreasonable as to justify disregarding section 36B’s plain meaning. Finally, turning to the ACA’s purpose and legislative history, we find that the government again comes up short in its efforts to overcome the statutory text. Its appeals to the ACA’s broad aims do not demonstrate that Congress manifestly meant something other than what section 36B says.

Those highlighted parts are wholly ridiculous. Noone believes that Congress didn't intent people in Federal exchanges to receive subsidies. And furthermore, how can they argue that removing the Federal Subsidies doesn't make the ACA unworkable? It's embarrassing when judges haved already decided what outcome they want and then fabricate reasons to get to that outcome. Even read what a Republican staff attorney had to say:

One thing that isn’t in doubt, according to a Republican staff attorney who was present at the creation, is whether Congress wanted health-insurance subsidies to flow through federal exchanges.

“Congress always intended for the federal exchanges to do everything the state exchanges do, one of those things being the federal subsidy,” said Chris Condeluci, an employment lawyer with Venable in Washington who was tax counsel to the Senate Finance Committee from 2007 to 2010. “I can say, even as a Republican, Congress always intended this, we just didn’t indicate it through legislative history because the process was so screwed up.

http://www.forbes.com/sites/danielf...es-it-just-did-a-terrible-job-of-saying-that/

 

[werepossum]

The mechanics are trickier than "just pay more." Is the employee married? Does the spouse earn an income? Does the employee have taxable capital gains? Etc. An identical hypothetical scenario in which the employee is married and the spouse also makes $15/hr would mean the employer doesn't pay the penalty. The only way to ensure that the wage is high enough to make the coverage affordable is to ask questions which are considered illegal or ill-advised to ask.

The characterization of the lawsuit itself can be easily biased. "ue to stop your employee from getting help from the government after you refused to provide him with affordable insurance" is one way to put it. "Sue to stop the government from illegally fining me" is another way. If you're caught speeding by a sheriff in the wrong jurisdiction, should you still pay the ticket? Some would say you shouldn't have been speeding at all, others would say that your guilt doesn't expose you to illegal punishment.

Pretty good summation. Nonetheless, for me the issue remains:
1. The ACA implementation was horribly botched, causing a lot of pain.
2. Now most parts are implemented most of the way, with some parts still not being ready and/or being delayed for political benefit.
3. It hurts a few people a fairly moderate amount, hurts most people a little bit, helps some people a little bit, and helps some people a lot. The losers lose comparatively little; some of the winners gain comparatively greatly. Having one's premiums (or more likely, one's portion of the premiums) go up even 50% is a rough lick, but it's not really comparable to the economic and health risk of not having health insurance. And those of us who are hurt little or moderately do gain some intangible amount; even if you don't need free birth control, there is some reduction in risk of bankruptcy due to medical costs.
4. Having endured the societal pain of having this obomination thrust upon us, why would we want to go through that again to have it ripped away just when it's working reasonably well? I'm very slightly on the losing end of this program, but a few hundred bucks a year is not enough incentive to make me want to rip affordable health insurance from those who have just now gotten it, and it's certainly not enough to motivate me personally to want it ended under the assumption that after repeating the pain things will be just as good as before.

I'm all in favor of repealing Obamacare. But first, show what you have that's better AND show me it works better on a couple states so we don't go through all this mess again for naught, because ending Obamacare is likely to be about as painful as was implementing it.

 

[Fern]

I'm a toolmaker & diemaker, not a lawyer so I'll certainly usually defer there.

Was just commenting on some recent things I'm a bit uptight about.

Things like that do usually occur in little bites over time, is how we've progressed to where we are, legal erosion of civil rights more or less.

Tell me I'm wrong on that one with a straight face

I think you're correct about that (the bolded).

But I have no problem with closely held corps being treated as if owned directly by the shareholders. In "little bites over time" the law (whether tax law or civil law etc) and courts have all but forced even the smallest one-owner business to incorporate. After all, it's a pretty big money maker for govts (incorp fee, annual fees etc.).

Fern

 

[Fern]

I'm not worried. The full en banc court will overturn this ruling.

The ACA is a very badly drafted statute. And it’s badly drafted for a simple reason that turns out to be important to understanding how the pending litigation should be resolved: Because Senator Ted Kennedy died in the middle of the legislative process and was replaced by Republican Scott Brown, the statute never went through the usual legislative process, including the usual legislative clean-up process. Instead, because the Democrats lost their 60th filibuster-preventing vote, the version that had passed the Senate before Brown took office, which everyone initially had thought would be a mere first salvo, had to effectively serve as the final version, unchangeable by the House, because nothing else could get through the Senate.

Ummm. I disagree a little (minor point).

The ACA was actually amended, although I'm sure no one noticed the mistake then.

The Patient Protection and Affordable Care Act was signed into law by Obama on March 23, 2010.

Pelosi then introduced the Health Care and Education Reconciliation Act of 2010
to make changes to the Affordable Care Act. The Democrats used reconciliation to pass the amendments. On March 26, 2010, the Senate approved the amendments, 56 to 43, and the House passed them, 220 to 207. Obama signed the Health Care and Education Reconciliation Act of 2010 into law on March 30, 2010.

So Obamacare—The Patient Protection and Affordable Care Act—was actually passed in normal fashion without the use of Budget Reconciliation. However, Democrats did use Budget Reconciliation to amend the Act shortly after it was signed into law.

http://www.theattackdemocrat.com/2012/07/fact-check-budget-reconciliation-and.html

Fern

 

[Fern]

Thanks, Fern. I still have a question though. What legal standing do the plaintiffs have? They aren't the ones paying the subsidies, so is it the penalties business owners have to pay for employees that require subsidies? They are trying to avoid having to pay them by saying the employees don't qualify for the subsidies due to a technicality created by the SCOTUS ruling?

You're welcome.

Edit: Nevermind. I see it was answered.
When it comes to "legal standing" I just throw my hands up because I don't get it. I just saw a recent case where a Congressman was suing over the ACA. He was suing over that part that dictates coverage of Congressional staff and what his office can pay. Somehow the court ruled he had no standing even though the law had a direct and measurable impact on him. Legal standing? Beats the f' outta me.

Fern

 

[Fern]

why not write an ammendment to the ACA to include subs for the federal exchange.. vote on it..Isn't that the way its supposed to done?

First of all, when Congress passes a bill to amend something all sorts of crap gets tacked on. I imagine it would be quite amusing to see what sort of 'fixes' to Obamacare would be attempted.

Secondly, I doubt the House would pass a fix.

Ordinarily a 'technical correction-type bill would be passed. Since that's unlikely the Obama admin is trying a 'fix' via the courts.

Fern

 

[sactoking]

You're welcome.

Edit: Nevermind. I see it was answered.
When it comes to "legal standing" I just throw my hands up because I don't get it. I just saw a recent case where a Congressman was suing over the ACA. He was suing over that part that dictates coverage of Congressional staff and what his office can pay. Somehow the court ruled he had no standing even though the law had a direct and measurable impact on him. Legal standing? Beats the f' outta me.

Fern

That specific case is a bit more complicated. The ACA requires Congressional staffers to buy through the DC exchange. Exchanges are not meant to sell large group plans (and the fed gov't is a large group). The ACA actually prohibits large employers from paying a portion of the premium cost for exchange plans. This caused quite a conundrum, as Congressional staffers were being forced to buy through an exchange but lost the employer contribution (and were not eligible for tax credits). Treasury, OPM, and HHS came to the rescue and said that the gov't could make the employer contribution on behalf of employees. Additionally, members of Congress could declare staffers to be personal staff or committee staff and exempt them from the whole thing.

The guy who sued said that the decision to allow the employer contributions was illegal and the court threw it out under the premise that he could just declare his staff to be exempt and it wouldn't matter. In other words, an administrative remedy was available that precluded his need for a judicial remedy.

 

[werepossum]

That specific case is a bit more complicated. The ACA requires Congressional staffers to buy through the DC exchange. Exchanges are not meant to sell large group plans (and the fed gov't is a large group). The ACA actually prohibits large employers from paying a portion of the premium cost for exchange plans. This caused quite a conundrum, as Congressional staffers were being forced to buy through an exchange but lost the employer contribution (and were not eligible for tax credits). Treasury, OPM, and HHS came to the rescue and said that the gov't could make the employer contribution on behalf of employees. Additionally, members of Congress could declare staffers to be personal staff or committee staff and exempt them from the whole thing.

The guy who sued said that the decision to allow the employer contributions was illegal and the court threw it out under the premise that he could just declare his staff to be exempt and it wouldn't matter. In other words, an administrative remedy was available that precluded his need for a judicial remedy.

Maybe it's just me, but I have a HUGE problem with a court telling a Congressman he doesn't have standing because he can just lie about what his staffers actually do. One of the few problems D.C. cannot claim is an excess of honesty, and for a court to officially recommend further reductions is simply mind blowing. That smacks of "I have no legal reason to deny your suit, so I'm gonna make up some shit and fling it at the wall to see if it sticks."

 

[Stewox]

This is what happens when you craft 1,000 - 2,000 page bills.

That's not a mistake. That is a design.

 

[Genx87]

But let's get to the practical implications of repeal of the subsidies.
Many people in the states without exchanges will be exempt from the mandate, but insurers will not be exempt from medical underwriting ban. So people will wait till they are sick to get coverage. So not only are the people in those states going to be subsidizing other states with their tax money without getting Medicaid or subsidy dollars, they are going to get hit with huge health insurance bills, and insurers will pull out of their markets entirely. How long before they fold and start an exchange and accept Medicaid expansion? I give them 6 months.

Oh you mean that death spiral so many said could happen?

 

[theeedude]

Oh you mean that death spiral so many said could happen?

Yes, but just in the Republican states. Enjoy.

 

[Genx87]

Yes, but just in the Republican states. Enjoy.

I live in a state that is about as blue as it gets.

 

[theeedude]

I live in a state that is about as blue as it gets.

Good for you. Then you can safely enjoy watching Republican run states shoot themselves in the face to spite the gun, from the sidelines.

 

[nehalem256]

Maybe it's just me, but I have a HUGE problem with a court telling a Congressman he doesn't have standing because he can just lie about what his staffers actually do. One of the few problems D.C. cannot claim is an excess of honesty, and for a court to officially recommend further reductions is simply mind blowing. That smacks of "I have no legal reason to deny your suit, so I'm gonna make up some shit and fling it at the wall to see if it sticks."

Pretty sure that is how the courts work now a days.

At least they aren't pretending Asian people don't exist at least in this case :\

 

[Genx87]

Good for you. Then you can safely enjoy watching Republican run states shoot themselves in the face to spite the gun, from the sidelines.

I am too busy watching this state fumble around with their exchange to watch other states problems.

 

[theeedude]

Lack of standing is a legitimate legal reason to deny a suit. If you aren't impacted, you have no case.

 

[theeedude]

I am too busy watching this state fumble around with their exchange to watch other states problems.

Rightwingers like to tell us how states are laboratories of democracy. You should pay attention to the results of the experiments they are doing in their labs, so you don't repeat them at yours.