ObamaCare Law Implementation Update

September 30, 2011 JTaxes

Health Care Law Implementation Update
September 2011
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Federal Action:
• Supreme Court Decision Likely by June 2012: The Department of Justice confirmed this week that it did not seek a re-hearing en banc at the 11th Circuit for the largest suit involving 26 states. The only appeal option left for the Administration is the Supreme Court. Knowledgeable court watchers expect the hearing in the spring with a decision in late June. News Link

• Abandoning of CLASS: Last week, HHS signaled its intent to delay implementation of CLASS (the long term care benefit in ObamaCare). CLASS was widely understood to have funding problems, but was added at the last minute to make the bill appear not to cost as much. HHS fired the chief actuary for CLASS, redeployed the workforce, and did not ask for appropriated funds for 2012. This firing was on the heels of a Joint House and Senate Report detailing CLASS’s problems. HHS denies the reports although their actions speak clearly. News Link

• Possible Lower Medicaid Reimbursements: In order to garner state support for the massive expansion of Medicaid within ObamaCare (projected 20M people), the law includes a much higher matching rate to the states for Medicaid expenses for the newly eligible. The federal government would pay 100% of all costs from 2014-2016 decreasing to 90% in 2020. However, as part of the President’s proposal to the super committee proposal to cut spending, the President proposes changing this provision and lowering Medicaid reimbursements to states. This is yet another budget gimmick that once the law actually plays out will cost much more than originally projected. This is a key issue to watch for States through the super committee process. President’s Health Care Fact Sheet (See Pg. 5)

Exchanges:

• Error with Tax Credits: First reported by Investor’s Business Daily, an error was discovered with the text of the bill. Originally, an individual within 133-400% of the Federal Poverty Level was eligible for tax credits to help finance the purchase of insurance through Exchanges, either created by a state or the federal government. However, the bill language actually only awards credits to those who purchased insurance through a state-based Exchange, NOT a federal Exchange. The Treasury’s rule on the tax credits awards to both Exchanges, but this will be closely watched going forward. News Link Phil’s Piece on the Issue

• Taxes on Businesses in your State: Due to the issue above, support for a state-based Exchange opens the door to a tax on businesses. If an employee purchases from an Exchange because his or her insurance is “unaffordable” and the employee is eligible for a tax credit, the employer is fined $3,000 per instance. Therefore if only purchases from a state Exchange provide eligibility for the tax credit, then only businesses in states with state-based Exchanges are eligible for the fine. State exchanges lead to taxes on state businesses. News Link

• Updated Talking Points: We have updated our Exchange talking points to reflect this new revelation. Talking Points

• Implementation by State: Here is a quick summary of Implementation Activities by State. It shows which states have created an Exchange, how much funding has been accepted, and whether a state is party to the ObamaCare suit. State by State Implementation

Cost of Insurance:

• Dramatic Increase in Premiums: The States of Wisconsin and Ohio have released studies comparing the price of individual insurance premiums after 2014. The Wisconsin study projects an average increase of 30% while the Ohio study predicts increases between 55 to 85%. Ohio Study News Link Wisconsin Study-Heritage’s Summary

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