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Today’s Taxpayer News!
Not so Affordable Care Act: A new report by CMS says that Obamacare will increase overall healthcare spending by a whopping $621 billion, a cost taxpayers will have to front. Read more at Heritage.
Ineligible receivers: An audit of Tennessee’s state health plan shows taxpayers lost $1.5 million due to officials failing to recognize a number of ineligible citizens who are participating in the program. Watchdog.org has more.
To the dogs: The city of Nashville has spent $30,000 on waste bags for dog refuse. Although, the metro area is attempting to find more cost effective solutions. Find out the details at Fox17.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Today, the Republican Study Committee released a health care bill that would repeal the Affordable Care Act, or “Obamacare,” and replace it with a number of market-based reforms and improvements to the tax code. You can read more about the legislation here and read NTU’s supportive letter to the bill’s author, Rep. Phil Roe (R-TN), here.0 Comments | Post a Comment | Sign up for NTU Action Alerts
All too many federal agencies can be cited for having budgetary skeletons in their closet, and U.S. Customs and Border Protection (CBP) is no exception. From poorly managing a drone fleet purchase, to making questionable demands for more employees, CBP has raised fears for the security of taxpayers’ wallets in the past. Yet, Congress has an opportunity to ease future fears, over a controversial new CBP project, before it can cause a fiscal fright.
Two years ago, the U.S. Department of Homeland Security (DHS) concluded a letter of intent with the United Arab Emirates to build a “pre-clearance” facility at Abu Dhabi airport which would allow travelers to the U.S. to clear customs before arriving on American soil. So far, so good: pre-clearance can not only save time and reduce congestion at U.S. points of entry, it can also help ease the way for tourists who contribute to economic activity while visiting here.
Now for the not-so-good:
All these drawbacks lead to one long question: Given CBP’s service challenges at existing airports, is it really a good idea to plow ahead with a facility whose use will be comparatively scarce in the near term, and give another leg-up to an airline backed by its own government as well as ours, at the expense of an already overtaxed flying public?
And “overtaxed” is an understatement. As NTU has often noted, the typical overall government tax and fee burden of 20 percent on a $300 domestic airfare is higher than the average effective rate a middle-class American is likely to pay on his or her 1040 income tax return. International air travelers can have it even worse, with impositions such as separate departure and arrival taxes along with a passenger agricultural inspection fee (which the Obama Administration ill-advisedly considered raising in 2009) and a customs fee.
Proponents of the CBP station at Abu Dhabi argue that the investment of U.S. tax dollars will be minimal since UAE will pick up 85 percent of the project’s expense under the current agreement. But that’s little comfort to tax-weary travelers in America (see above), who remain worried that whatever share they will be forced to commit could escalate if construction or operating costs are not contained. Meanwhile, there’s that pesky matter of how best to apply CBP’s fee collections as well as appropriations from general funds – should they be used to expedite higher-priority passenger and cargo entry-exit services?
Many Members of Congress seem to think so. In June, the House of Representatives passed an amended FY 2014 DHS Appropriations Bill specifically blocking the Abu Dhabi pre-clearance scheme. In May, a bi-partisan group of 11 Senators echoed the sentiment of their House colleagues in a separate letter to DHS Secretary Janet Napolitano, questioning whether the agency’s “decision was made as a result of a risk based analysis.”
Alas, earlier this month DHS announced it was moving forward with a data-sharing agreement that could pave the way for the facility’s activation, even as it faces a concerted petition effort from interested industry groups with considerable clout.
Regardless of the politics involved, the taxpayer aspects of the issue deserve further exploration – that goes not only for the Abu Dhabi pact but also the ever-troubling direction of the Ex-Im Bank. Allowing the free market and fiscal responsibility to sort out needs from niceties would provide some badly-needed bone-rattling for those accustomed to budgetary business as usual in Washington.1 Comments | Post a Comment | Sign up for NTU Action Alerts
With summer recess under way for the majority of state legislatures, taxpayers can claim an important victory: less than half of states have opted into the outlandish Medicaid expansion scheme. Many legislators already recognize that Medicaid is already embroiled with fraud, waste, and abuse. Understanding that expanding the system augments the flaws, they want reforms before tying their state to a sinking ship. But we shouldn’t celebrate for too long—the fight for smaller government rages on as a handful of states have emerged as battlegrounds and others are attempting to craft their own versions of Medicaid expansion.
Tax-and-spenders are trying to paint Medicaid as an ideal program which gives everyone “free” healthcare. A writer at MSNBC portrayed expansion almost as a mandatory policy, stating that “It’s been exactly one year since the Supreme Court ruled that the Affordable Care Act was the law of the land, but Republicans continue to reject it.” This statement fails to acknowledge that the Supreme Court gave states, on that exact same day, the right to opt out of expanding the program. Even beyond this misguided assessment, a growing number of Republican governors have thrown their support behind expansion. Jan Brewer (AZ), Chris Christie (NJ), Rick Scott (FL), Rick Snyder (MI), John Kasich (OH), Susana Martinez (NM), Terry Branstad (IA), Brian Sandoval (NV), and Jack Dalrymple (ND) all have turned their backs on fiscal responsibility.
The good news is that out of the fifty states and Washington D.C., only twenty-four (less than half!) have agreed to take part in Medicaid expansion, and twenty-one are not moving forward at this time. Some states, such as Arkansas, Indiana, Iowa, and Tennessee are also pursuing alternative state versions. At the end of the day, there are still a handful of battleground states that could go either way. Because one vote, purposeful or mistaken, can impede the creeping expansion of this immense policy, grassroots communication to state officials has been and will continue to be essential to keep lawmakers from supporting the expansion.
The following details the current status of battleground states where debate continues:
Recent events lend credence to the hesitancy of states to fully commit to Medicaid. The administration’s delay of the employer mandate, announced over a Treasury blog post, may shift the balance in the conservatives’ favor. President Obama has framed the delay as an allowance for states to have more time to comply with the mandate; however, it can easily be seen as an acknowledgement of the intricate difficulties involved in widespread enrollment in the entire ACA program, including Medicaid. Michael Cannon at the Cato Institute explains that the “purpose of the employer mandate was to reduce the economic and political upheaval that the rest of ObamaCare will unleash.” Medicaid will be much more burdened without that stabilizing factor for at least the first year of implementation. If an employer mandate is too complex for businesses to carry out, then why think that Medicaid expansion is manageable? Why spare businesses and not individuals? Avik Roy also pointed out that:
Effectively, states no longer need to expand Medicaid, because this newly Medicaid-eligible population can now sign up for the exchanges, at no cost to the state, and know that their incomes won’t be verified by the IRS…The feds will also allow people to gain means-tested subsidized coverage on the exchanges without having to…test their means.
Despite grassroots opposition to the program, some lawmakers and governors continue to be tempted by the promise of “free” federal dollars to expand Medicaid. But that money isn’t free. The Kaiser Family Foundation acknowledges that federal Medicaid spending would increase by 26 percent, or $952 billion, as a result of expansion. State lawmakers should bear in mind that everything that government funds is actually footed by their constituents’ hard-earned tax dollars. Additionally, by rejecting the expansion, state legislators have an opportunity to slow Washington’s reckless borrowing binge.
States’ actions over the next year may determine the future of Medicaid expansion and the Affordable Care Act as a whole. Some legislators propose temporarily trying it out and withdrawing if necessary. This fallacious argument is possibly the most disappointing; as Ronald Reagan cautioned, “governments' programs, once launched, never disappear.” With this in mind, taxpayers should continue to encourage legislators and governors to keep up the good, responsible fight. Otherwise, Medicaid expansion—and an onslaught of tax hikes to pay for it—could be here to stay.0 Comments | Post a Comment | Sign up for NTU Action Alerts
Poor Charlie Brown. Lucy’s snatched the football away again - except this time, the football is Obamacare’s “deficit savings” and the American taxpayer is the one knocked flat on the ground.
Obamacare was sold on the premise that it would reduce the deficit. The Congressional Budget Office reported reductions of $130 billion in the first decade after passage, and $1.2 trillion in the second. President Obama even went so far as to say that the legislation was “the most significant effort to reduce the deficit since the Balanced Budget Act in the 1990s.”
Since the passage of the act, however, we’ve seen development after development completely disintegrate what many already viewed as misleading claims of budget relief.
As Reason.com noted, the bill was written to hide the costs beneath inflated “savings,” and higher insurance premiums and poor actuarial work would take their toll as well. The Heritage Foundation also tore the claims to pieces, pointing out that legislators ignored the expensive “doc fix,” and set the terms of several taxes and subsidies to falsely boost the idea of deficit reduction.
Now, after three years, the story of the “debt reducing” parts of the Affordable Care Act likely has the initial skeptics echoing Jurassic Park’s Ian Malcolm in saying, “Boy do I hate being right all the time.”
The most blatant attempt to cover “Obamacare’s” new spending was the CLASS Act. It offered, for what seemed like a reasonable premium, average long-term insurance benefits of at least $50 per day. Originally, the Congressional Budget Office (CBO) estimated that CLASS could cut the deficit by $70 million. Unfortunately, the program itself was unworkable from the get-go.
The CBO couldn’t even effectively measure the program, because no benefits were scheduled for distribution until at least five years after initial enrollment. CBO scores only cover the ten-year span after a law is enacted - so for the first half of the study, the “cost” of the program was effectively zero. Naturally, this bit of budget wonk-ery quickly caught up to the administrators of the program. As NTU noted, “an ‘insurance death spiral’ was inevitable – high premiums and a short vesting period would discourage all but the sickest Americans from signing up...this would drive premiums even higher, further discouraging the young, healthy people needed to keep costs manageable.”
The Department of Health and Human Services “realized” this before long as well, and CLASS was abandoned in October 2011 having done its main job of reducing the Affordable Care Acts CBO score.
The Employer Mandate is the most recent piece of “Obamacare’s” deficit reduction bundle to bite the dust. One of the most crucial financial supports of the Affordable Care Act, the mandate requires every employer with more than 50 employees to provide health insurance or pay a hefty penalty. A non-insurance providing company will owe $2,000 for each employee ineligible for low-income exchanges, and $3,000 for each employee eligible for the exchanges. The penalties are intended to fund the exchanges themselves, and tax credits for insurance purchase. However, the Obama administration recently delayed the mandate, extending the deadline for employer insurance coverage to 2015.
This is a budget-buster in more than one way: not only will the administration lose out on $10 billion in potential penalties in the upcoming year, but the infamous individual mandate was not tied to the employer one. This is creating an incentive for companies to dump employee insurance ahead of schedule, avoiding both the cost of health insurance and the first year’s fees. However, those unlucky employees will still be bound by the individual mandate, and many will likely be forced onto government exchanges. If Congress doesn’t act to delay the individual mandate as well, the costs could spiral much higher, both for the consumer and for Obamacare.
Finally, inefficient insurance exchanges threaten to chew up any “savings” created by other programs, and then some. Originally, wage and income data from the IRS was supposed to be used to determine eligibility for exchange subsidies. The problem is, the information needed didn’t (and still doesn’t) exist in a “real time” database. Such a collection of information would be costly and time-consuming to create, not to mention the requirements of keeping such a database secure.
Eventually, the administration admitted defeat, and announced that they would be offering subsidies based on self-reporting: basically, “the honor system.” Given the government can only impose penalties for fraud on your tax refund, the honor system is a particularly expensive way to conduct business. If you don’t collect a refund, no penalties will be imposed.
“Obamacare’s” supporters used “deficit reduction” as a major plank in arguing for passage of the law. As many critics predicted, though, in actual practice they’re limited by structural deficiency and an inability to respond efficiently to market forces. Now, the budget-busting reality of his health care reform boondoggle should be clear to all, but sometimes it seems only those paying the bills truly notice.9 Comments | Post a Comment | Sign up for NTU Action Alerts
The Late Edition: May 21, 2013
Today’s Taxpayer News!
The House plans to vote tomorrow on moving forward with the Keystone XL pipeline, an economically beneficial project which NTU and a wide coalition of interests support.
In the midst of unraveling the IRS’s targeting of conservative groups, it has also come to light that the agency improperly gained access to millions of personal health records, calling into question its upcoming role in implementing “Obamacare.” Read the full story from the Heartland Institute.
A Washington Post-ABC News poll released today finds that 56 percent of those polled believe the IRS intentionally singled out conservative groups for unfair treatment, says The Hill.0 Comments | Post a Comment | Sign up for NTU Action Alerts
The Late Edition: May 14, 2013
Today’s Taxpayer News!
NTU’s Pete Sepp expresses concern over a proposal to have the IRS pre-fill tax returns, in light of the scandal surrounding allegations the agency singled out conservative 501(c)(4) tax exempt organizations for increased scrutiny. Read more from Politico.
The list of organizations opposed to the “Dairy Market Stabilization Program” (DMSP), which would artificially raise milk prices and limit the dairy supply, is growing. The Wall Street Journal lists almost 150 organizations which have come out in opposition to the legislation, including NTU.
According to Businessweek, Health and Human Services Secretary Kathleen Sebelius has been soliciting funds from private organizations to help enroll people in “Obamacare” exchanges.0 Comments | Post a Comment | Sign up for NTU Action Alerts
The Late Edition: May 1, 2013
Today’s Taxpayer News!
NTU’s Michael Tasselmyer writes on the defense debate brewing over cutting off funding for Abrams tank production in this budgetpriorities.org piece.
With just 35 percent of Americans holding a favorable view of ObamaCare, Democrats are worried their chances in the 2014 midterm elections could be hindered, says Politico.0 Comments | Post a Comment | Sign up for NTU Action Alerts
The Late Edition: April 4, 2013
Today’s Taxpayer News!
NTU’s Pete Sepp discusses the unfair campaign to increase the tax burden on the oil and gas industry in this piece from The Hill.
Trouble in ObamaCare paradise? This article from HuffPo explains ObamaCare’s rapidly dissolving pledge to eliminate costly waste in the healthcare industry.0 Comments | Post a Comment | Sign up for NTU Action Alerts
As President Obama's health care reform bill is gradually implemented, there are growing concerns over new taxes required to pay for it. In particular, a tax on medical devices has sparked protest from some legislators and professionals within the health care industry.
The 2.3 percent excise tax went into effect on January 1, 2013. The provision is important for financing benefits under Obamacare: the Joint Committee on Taxation estimates that the tax could raise $29 billion over the next ten years, and medical device manufacturers have paid some $388 million to the IRS since the beginning of the year.
Since the law took effect, there's been some confusion over how and when to pay the tax. Not only does it factor into sales of complex medical devices such as CT scanners, X-ray machines, and pacemakers, it's also enacted on sales of other, more basic products, such as tongue depressors and possibly even latex gloves. The IRS lists certain devices that are exempt from the tax, including eye glasses, contact lenses, and other retail or over-the-counter items designed for individual use. Devices used exclusively for veterinary purposes are exempt -- but devices that are designed for both human and animal use are taxed. However, the details on how to make the distinction, when to apply the tax, and how much it could affect consumers and pet owners are still uncertain.
The complexity of the tax may lead to some manufacturers overpaying to comply with the law. As the Tax Foundation notes, an important component of the law is its "constructive sales pricing." That portion of the tax code is designed to allow firms that don't usually sell their products to outside companies to derive a market value for any medical devices they do sell. It presents an additional layer of compliance that manufacturers must navigate in order to avoid trouble with the IRS. Smaller firms are typically less able to hire advisors to guide them through the compliance procedures, which could exacerbate the problem. The IRS has now issued guidelines twice to medical device manufacturers.
On the other hand, there are some who believe the negative effects of the law have been overstated. The Center on Budget and Policy Priorities (CBPP) published a study suggesting that as the Affordable Care Act expands medical coverage to more people, the increased demand for medical devices will lead to higher sales of medical devices, offsetting the additional cost of the tax. CBPP also argues that any increased production costs that manufacturers have to pay to comply with the tax are unlikely to be passed on to the consumer.
In February, NTUF examined a bill sponsored by Congressman Erik Paulsen (R-MN) designed to repeal the 2.3 percent tax. It picked up over 212 cosponsors in the House, and the Senate version of the bill had 30 cosponsors as of this post's publication. Because NTUF estimated that the bill would likely only have regulatory- and revenue-related effects, under BillTally rules, we scored the legislation as a "No Cost" revenue bill. Last week, the Senate approved an amendment during budget votes that would repeal the tax altogether; that amendment passed by a bipartisan 79-20 vote.0 Comments | Post a Comment | Sign up for NTU Action Alerts