Monday, January 04, 2010

Health bills could expand IRS role

Internal Revenue Service agents already try to catch tax cheats and moonshiners. Under the proposed health care legislation, they would get another assignment: checking to see whether Americans have health insurance.

The legislation would require most Americans to have health insurance and to prove it on their federal tax returns. Those who don't would pay a penalty to the IRS. That's one of several key duties the IRS would assume under the bills that have been approved by the House of Representatives and Senate and will be merged by negotiators from both chambers. The agency also would distribute as much as $140 billion a year in new government subsidies to help small employers and as many as 19 million lower-income people buy coverage. In addition, the IRS would collect hundreds of billions of dollars in new fees on employers, drug companies and device makers, according to the non-partisan Congressional Budget Office (CBO).

Some critics of the health bill question whether the IRS, which has struggled in recent years with budget problems, staffing shortages and outdated computer systems, will be up to the job of enforcing the mandate and efficiently handling the subsidies.

"It's hard to see how the IRS could take on the huge responsibility it would be given under pending health care legislation without some real glitches, or worse," said Sen. Chuck Grassley of Iowa, the top Republican on the Senate Finance Committee. He voted against the bill, as did every other Republican senator.

The CBO estimated the IRS would need $5 billion to $10 billion in the first decade to cover the costs of its expanded role. The IRS' annual budget is currently $11.5 billion. Neither the House nor Senate bill includes funding for the IRS, but money could be added by House and Senate negotiators. The IRS already has trouble meeting its primary duty: collecting taxes. By the IRS's own estimates, it failed to collect about $290 billion in taxes in 2005, the latest year for which data are available.

Pete Sepp, spokesman for the National Taxpayers Union, an IRS watchdog group, says the IRS might be the "logical" agency to enforce the mandate, "but that doesn't mean things will go smoothly."

Howard Gleckman of the Urban Institute, an economics and social policy think tank, sees the IRS' proposed new role as a part of a historical pattern. "We are always asking the IRS to do all kinds of social engineering," he said, such as tax credits for new homeowners and renewable-energy companies.

In one of the biggest examples of using the tax code to achieve a social goal, Congress shifted much of its effort to help the poor in the 1990s from direct spending to the Earned Income Tax Credit, an IRS-run program that pays rebates to low-income working people to offset taxes. In 2005, more than 22 million people claimed the credit, resulting in more than $40 billion in payments, a Treasury Department inspector general found last year. The audit found $11.4 billion in improper payments in 2005 — about 28 cents of every dollar paid out.

Grassley has called the program "rife with fraud and abuse." John Dalrymple, a former IRS deputy commissioner, said the tax-credit program — despite its flaws — demonstrates that the IRS has the experience to handle the new subsidy program.

Under the health care legislation, the IRS would determine who qualifies for the insurance subsidies. Those subsidies would apply to people with incomes up to four times the federal poverty level, which is $43,320 for an individual and $88,200 for a family of four. The government would pay insurance companies to help individuals buy policies on the new exchanges. The exchanges, a central feature in both bills, would be a sort of marketplace where small businesses and individuals who don't get employer-sponsored coverage could shop for health plans.

To meet the mandate, Americans would have to provide proof of insurance coverage with their annual tax returns. The mandate would begin in 2013 under the House bill; 2014 in the Senate bill.

The penalty in the Senate bill for not having coverage would start in 2014 at $95 or 0.5% of an individual's income, whichever is greater. It would rise to $750 or 2% of annual income in 2016, up to the cost of the cheapest health plans. The House bill penalty would be up to 2.5% of an individual's income up to the cost of the average health plan.


2 and 2 make 8: Obamacare goes Orwell a few better

In their enthusiasm for passage of a health-care reform package that President Obama can call his own, Congressional Democrats have stumbled upon some new math that would upstage George Orwell himself — and pose a grave threat to the nation’s fragile economic recovery.

Even Winston Smith, the hero of Orwell’s “1984,” was forced no further than the improbable two plus two make five, and it didn’t sit too well with him. Democratic proponents of Obamacare have gone several steps further, arguing that they can slash some $500 million from Medicare over the next decade and then apply that money in two places at once: Against the federal deficit, so as to reduce it by some $132 billion, and for new health-care coverage for millions of Americans without it.

It is as if, by counting each dollar twice, Obamacare’s backers had decided that two and two make eight. But no amount of enthusiasm and accounting legerdemain can hide the fact that two and two still make four. The Democratic projections posit rates of growth that few economists endorse, finance six years of reforms with 10 years of taxes, and make no allowance for the changes in consumer behaviors and insurance markets that are likely to come about as a consequence of their reforms, including a partial collapse of the private insurance system.

As Republican Sen. Jon Kyl of Arizona has aptly put it, “You can’t sell the same pony twice.”

Normally, we’d be inclined to agree with Mr. Kyl, but this administration and the majority in Congress have shown no reluctance to spend money that does not exist. The trillions conjured into existence to pay for corporate bailouts and government control of parts of the banking, automobile and financial services sectors have distorted credit markets, engraved lines of worry on the brows of foreign investors, and are sure to have dire consequences down the road. In such an environment, what’s one more bit of new math? The more we look at the specifics of the health-care “reforms” contained in the House and Senate bills that have won approval, the more we think that the one-time pony is being groomed for a new life as a Trojan horse.

The “savings” that Democrats perceive, and the new revenues they envision, are simply cuts to existing services and new taxes on middle- and upper-income Americans, respectively. When combined with a vast and powerful new bureaucracy, all wrapped in legislation which is designed to admit of neither amendment nor appeal, these “savings” will lead to fewer choices for consumers of health care, longer waits, more forms to complete, higher co-payments, and more forms to fill out, and an inevitable decline in the health of Americans.

Mr. Obama’s oft-repeated assertion that if you like your health plan, you can keep it under the reform he signs into law, is no more true now than it was under any of the previous reform proposals on Capitol Hill. With polls showing nearly two-thirds of Americans opposed to the reform legislation, and Congress poised to return to action this month, the time to raise voices in opposition is now, before the belly of the beast disgorges another wave of destruction upon an economy that is only beginning to rebuild its strength.


If the price is right

At almost 80 years old, Thomas Jefferson foresaw the corruption of a federal government with too much power, when he wrote to William T. Barry in 1822, just a few years before his death: "If ever this vast country is brought under a single government, it will be one of the most extensive corruption[s], indifferent and incapable of wholesome care over so wide of spread of surface." "Wholesome care" like health care?

I waited until after the New Year to write this column because Washington was hoping its Christmas corruption would evade the majority of holiday revelers or become old news to even political junkies and pundits who are now moving onto new issues. (This White House astutely understands and utilizes news cycles and calendars far better than any preceding presidencies.)

While you were with family and friends enjoying the holiday festivities, Congress and the president passed a $1 trillion omnibus bill with more than 5,000 earmarks (and covertly also loaded with far-left anti-family underpinnings). (Mr. Obama, what happened to your promise to eliminate all earmarks?)

The U.S. Senate also passed an $871 billion health care reform bill on Christmas Eve through shady, sweetheart backdoor deals. While you were cutting your Christmas spending because of the recession, Congress charged you and your children's national credit card with another $2 trillion plus.

For those who missed the bloated bureaucratic holiday news, President Obama exclaimed that congressional Democrats "scored a big victory for the American people," but, in fact, it was actually our senators who scored big time through political and personal payoffs. Even the New York Times blew a trumpet about them.

Senate Majority Leader Harry Reid passed out Christmas bonuses, what I call perpetual pork, gifts that keep on giving, unlike those familiar single hits at the public trough. He initiated a new frontier in pork-barrel politics. His corrupt and creative diversions included giving out Medicaid and Medicare credits like another round of pork projects. In 383 pages of changes to the 2,076 page Senate bill HR. 3590, there are dozens of these types of pork rind provisions for senators.

This health-care pork round all started with Sen. Mary Landrieu, D-La., who bragged about receiving a $300 million increase in Medicaid funding for her state (what some are calling the second Louisiana Purchase), which turned out to be only $100 million. (Isn't that a relief?)

Then there was the now infamous Sen. Ben Nelson, D-Neb., who gained his 15 minutes of yuletide fame when he sold out his critical 60th vote to pass Obamacare by accepting a governmental bribe that covers Nebraska's Medicare expansion costs to the tune of $100 million over the next 10 years.

With Obama having told the AARP back on July 28 that he considered Medicare Advantage an example of "wasteful spending," you could bet Obamacare would reflect his commentary. And in a statement released after the Senate health-care bill passed on Dec. 24, Sen. Bill Nelson, D-Fla., confessed his sweetheart deal made behind closed doors: "I was able to pass an amendment to the bill that excluded some 800,000 policyholders all across Florida from cuts to Medicare Advantage."

But wait there's more – much more. Sen. Patrick Leahy, D-Vt., finagled $600 million in additional Medicaid benefits for his state over 10 years.

Sens. Byron Dorgan, D-N.D., and Kent Conrad, D-N.D., secured additional Medicare payments for their rural hospitals

Sen. Tom Harkin, D-Iowa, chairman of the Senate health committee, openly confessed "I fully admit that I was part of it. I put something in the bill that was particular to the state of Iowa. Yes I did," referring to the increase in Medicare payments to eight medium-sized hospitals in his state.

Sen. Max Baucus, D-Mont., chairman of the Finance Committee and a primary architect of the legislation, secured extra Medicare benefits for select Montana residents.

Sen. Bernie Sanders, I-Vt., was opposed to backing the bill until Reid agreed to a $10 billion increase in support for community health centers.

The Manager's Amendment singles out Sens. Daniel Akaka's, D-Hawaii, and Daniel Inouye's, D-Hawaii, home state of Hawaii as the only state to receive a Disproportionate Share Hospital, or DSH, extension.

Hospitals in Sen. Joseph Lieberman's home state of Connecticut, like Carl Levin's, D-Mich., and Debbie Stabenow's, D-Mich., state of Michigan, have the option to benefit under provisions if it means higher payments.

Sen. John Kerry, D-Mass., among senators in other states, won deals for more generous federal payments under the Medicaid program.

At the last minute, Sen. Christopher J. Dodd, D-Conn., inserted a $100 million kickback in the bill to construct a new hospital for the University of Connecticut.

And Sen. Roland Burris, D-Ill., won the super-loser award for claiming credit for the provision in the Reid bill that could eventually provide federal funds again for ACORN!

Another huge beneficiary of the Senate health care bill's monetary benefits are some insurance companies (just when you thought our government was protecting us from those big bad corporate monopolies). A proposal was initially made by Sen. Carl Levin, D-Mich., to exempt non-profit insurance companies from the Senate bill's $6 billion annual excise tax on insurers. Sen. Ben Nelson, D-Neb., (remember the cornhusker kickback?) then sealed that sweetheart deal in a way that only Mutual of Omaha Insurance Company and Blue Cross Blue Shield nonprofit plans in Nebraska and Michigan qualified. By the way, nonprofit insurers in Sen. Levin's home state of Michigan control 76 percent of industry profits. Incidentally, the industry spent $635 million lobbying during the last two years, obtaining a host of concessions at taxpayer expense.

And to secure its shady deals so that no one (and I mean no one) can avert its actions, Congress has inserted one of the most unconstitutional sections I've ever read in a piece of legislation: Section 3403 of Reid's amendment on Page 1,020 reads, "It shall not be in order in the Senate or the House of Representatives to consider any bill, resolution, amendment or conference report that would repeal or otherwise change this subsection."

Of course, Harry Reid merely labeled these backdoor deals as "the art of compromise," but we all know it better as "the art of corruption." He said what they've done with the Senate health-care bill is "no different than other pieces of legislation." I agree with him – that's the problem!

Even David Axelrod, senior adviser to President Obama, minimized the corruption in these senatorial sweetheart deals by saying, "That's the way it has been. That's the way it will always be." Do you share his pessimism? Is that the government you want for your children and grandchildren? And these are the politicians in whose hands you are trusting your and your loved ones' future health care?

Most important is the question Sen. Orrin Hatch, R-Utah, posed to his colleagues, "Who will pay for these special deals?" "The answer is simple – every other state in the union."

It's no surprise that congressional Democrats have mounting opponents even in their own camp, two of the newest opponents are governors from the bluest states in the union, Arnold Schwarzenegger, a moderate Republican, and David Paterson, a liberal Democrat, who oppose the Senate's health-care reform bill because they believe the new Medicaid mandates will lead to the financial ruin of California and New York.

And all the costs haven't even been calculated yet, because the bribery isn't over. The House and Senate leaders will now hold private negotiations this month to merge the Senate's $871 billion and the House's $1 trillion health-care bills. And you don't think that some bribery babble has already been occurring in the closets and corridors of Congress? ...

In November 2010, all 435 House seats will be open for re-election, and one-third of the Senate seats will be open for re-election as well. The time is now to eject the unconstitutional corrupt congressmen, and it's time to let them know what's coming. I agree with Tea party leaders, who are delivering bold ultimatums to all congressional candidates in 2010: "Pledge to repeal the health-care reform bill in its entirety – or you will be booted from office." Congress, you're waking a sleeping giant, and you're not going to like the consequences.


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