HHS has quietly greased the palms of compliant state insurance regulators with a $250 million bribe.
Shortly following last week’s revelation that Obamacare premiums will spike yet again in 2017, the Centers for Medicare and Medicaid Services (CMS) announced that it would offer $22 million in grants to state insurance officials to enforce “compliance with Affordable Care Act key consumer protections.” The Obama administration will, in other words, bribe state regulators to impose price controls on insurers selling coverage through Obamacare exchanges. Where did CMS get the $22 million? From a multi-million dollar slush fund the federal government has quietly used to control state insurance departments over which it has no legal authority.
This money, as CMS puts it, “is part of $250 million in state rate review grants the Affordable Care Act provided to improve the process for how states review proposed health insurance rate increases and hold insurance companies accountable for unjustified hikes.” The press release also claims that the $22 million will be distributed from “unobligated rate review grant funding from prior years.” This is odd considering that $246.9 million of the $250 million has already been awarded. It would be interesting to hear Andrew Slavitt, the Acting Administrator of CMS, explain how he got $22 million from a grant fund in which only $3.1 million remains.
Unfortunately, while it would be entertaining to hear the yarn Slavitt would dream up in response to a congressional inquiry on this point, his answer would probably not be terribly enlightening. He has already demonstrated himself to be a man of less-than-perfect honesty when he lied to Congress about the recoupment of unrelated grants his agency issued to various Obamacare exchanges. Likewise, there probably wouldn’t be much point in asking him why most of the $246.9 million in rate review grants went to Democrat-controlled states. New York, for example, received about $9.9 million. The state of Florida, on the other hand, got no money at all.
Once again, we find taxpayer funds being used for nakedly partisan purposes. But this is, after all, business as usual for the Obama administration. What makes these CMS rate review bribes particularly worrisome is that they undermine a core principle of U.S. government. Just as the President’s executive orders frequently ignore the separation of powers, this grant program actively undermines federalism. The regulation of insurance rates is a prerogative of the states. The central government has no authority, even under Obamacare, to preclude premium increases. In order to circumvent this limitation, the Obama administration set up this grant program.
Any state that has accepted a rate review grant is required to provide the health care apparatchiks at CMS with insurer information and to collude with them in imposing price controls in cases where rate requests are “unreasonable.” It goes without saying that the Beltway Bureaucrats concocted an arbitrary maximum for justifiable rate increases. In its final rule, the Department of Health and Human Services (HHS), under whose aegis CMS operates, “decided on the 10 percentage point threshold.” Any rate request exceeding 9.9 percent will set in motion an onerous federal review that will reduce state insurance officials to the status of spectators.
And most 2017 rate requests will exceed this threshold. As the Kaiser Family Foundation (KFF) reportedlast week, the 2017 increase for the “most common plan choices” made by individuals buying coverage through Obamacare exchanges will average 10 percent. Moreover, the natural cupidity of all politicians and bureaucrats being what it is, most states have eagerly seized upon all available premium review grants. Some stopped accepting the federal money after receiving start-up funds and a few actually returned their initial grants. But most states have been all too content to surrender a portion of their sovereignty in exchange for these federal bribes.
The tragic irony here is that the officials who accepted these bribes have harmed their states as well as their constituents. They have given away part of their independence from the federal government while exposing the citizens of their states to the ill effects that price controls inevitably have on any market. The arbitrary 10 percent threshold will lead to increased premiums and fewer plan choices for individuals. Rate increase requests will inch toward 9.9 percent even if the market calls for less, and insurers that need more than 10 percent to remain solvent will drop out of the exchanges à la United Healthcare if higher rates are blocked.
In the end, the taxpayers will have coughed up more than $250 million to make health coverage less affordable and more difficult to acquire. Meanwhile, the state officials who received the bribes and the federal bureaucrats who doled them out claim they are fighting the good fight against the evil health insurance companies. And, as for the “news” media that should be keeping these public officials honest: Have you ever heard of these rate review grants before today?
Written by David Catron for http://spectator.org/.
As I’ve repeatedly explained, governments generally get in fiscal trouble because politicians can’t resist spending lots of money when the economy is buoyant and therefore generating lots of tax revenue.
And this is why I’m a huge fan of spending caps. If outlays can’t grow faster than, say, 3 percent annually, that make it difficult for politicians to enact unsustainable spending commitments (as we’ve seen in Greece, Alberta, Puerto Rico,California, and Alaska) in years when there is extra revenue.
Now I have a new example, and it’s extra painful because the politicians literally want me to pay for their profligacy.
Here’s part of what was recently written in the Washington Post about the supposed budget hardships in my home county of Fairfax in Virginia.
Virginia’s largest municipality is fraying around the edges. A population that is growing older, poorer and more diverse is sharpening the need for basic services…even as a sluggish local economy maintains a chokehold on the revenue stream. Since the 2008 recession, local officials have whittled away at programs to the tune of $300 million. …Since 2008, the county has eliminated 700 jobs. Libraries operate on shorter schedules and with fewer books, class sizes have swelled past 32 students in some schools… County agencies are stretching out vehicle maintenance — including for school buses and fire engines — and officials say aging athletic courts and deteriorating playgrounds await nearly $20 million in repairs. …The county slashed $3.8 million in summer school funding in 2015 and is trying to use $374,000 less in paper this year.
But all this budget “slashing” apparently isn’t enough to balance the budget.
…there is no fat left to trim. Instead, they are searching for ways to raise taxes… The county is searching for new revenue to cover some of what officials estimate are hundreds of millions of dollars worth of unmet needs. …“We’ve been punting for seven years now,” said John C. Cook (R-Braddock), a county supervisor. “There’s really nothing easy left to cut.” …the County Board of Supervisors will decide whether to raise residential property taxes by as much as four cents — to $1.13 per $100 of assessed value.
Gee, sounds like the government has “cut spending to the bone” and imposed “savage austerity,” which means higher taxes are the only option, right?
Not exactly, Professor Don Boudreaux of George Mason University digs through the data and exposes the truth.
What budget cuts? In fiscal year 2016 Fairfax County’s government will spend $7.13 billion dollars – the highest inflation-adjusted annual expenditure in County history. And this real expenditure is the highest in County history even on a per-capita basis. …Fairfax County’s government today spends, per county resident, 168 percent more real dollars than it spent in 1975, 144 percent more than in 1986, 30 percent more than in 2001, and 1.6 percent more than in 2008 – the year that your reporter suggests marks the beginning of Fairfax County’s budget austerity. …it is emphatically not true that the Fairfax leviathan has cut its spending or suffered budget cuts. Quite the opposite.
Don included a table of data, which I’ve put into a chart.
Let me know if you can find where spending was “slashed.”
Remember, this is inflation-adjusted spending, and also per-capita-adjusted spending, which means we can do apples-to-apples comparisons.
And the comparison that really matters is that the local government is now spending more than twice as much as it did 30 years ago.
In other words, the same theorem of government that explains the behavior of Washington also applies at the local level.
P.S. Let’s close with a very appropriate joke about the type of people who create fiscal crises.
A father told his 3 sons when he sent them to the university: “I feel it’s my duty to provide you with the best possible education, and you do not owe me anything for that. However, I want you to appreciate it. As a token, please each put $1,000 into my coffin when I die.”
And so it happened. His sons became a doctor, a lawyer, and a financial planner, each very successful financially. When their father’s time had come and they saw their father in the coffin, they remembered his wish.
First, it was the doctor who put 10 $100 bills onto the chest of the deceased.
Then, came the financial planner, who also put $1,000 there.
Finally, it was the heartbroken lawyer’s turn.He dipped into his pocket, took out his checkbook, wrote a check for $3,000, put it into his father’s coffin, and took the $2,000 cash.
He later went on to become a member of Congress…
If you want more jokes about politicians, click here.
Here are some sobering details from a story in Business Insider.
The world is about to see a mind-blowing demographic situation that will be a first in human history: There are about to be more elderly people than young children. …And these two age groups will continue to grow in opposite directions: The proportion of the population ages 65 and up will continue to increase, while the proportion of the population ages 5 and under will continue decreasing. In fact, according to the Census Bureau, by 2050 those ages 65 and up will make up an estimated 15.6% of the global population — more than double that of children ages 5 and under, who will make up an estimated 7.2%. “This unique demographic phenomenon of the ‘crossing’ is unprecedented,” the report’s authors said.
Here’s the chart that accompanied the story.
And as you look at the numbers, keep in mind that entitlement programs mean that a growing population of old people means more spending, while a shrinking number of children means fewer future taxpayers to finance that spending.
Let’s now look at a nation that is the “canary in the coal mine” for why changing demographics is a recipe for fiscal crisis.
A story from The Week highlights the grim demographic outlook for Japan.
Japan is us, and we’re Japan. …Japan has a…serious problem on its hands: The country is literally dying. According to current projections, by 2060 the country will have shrunk by a third, and people over 65 years old will account for 40 percent of the population. Already, the country is selling more adult diapers than infant diapers. To say this is unsustainable is a euphemism. The country is quite simply dying. …Demography is not destiny, exactly, but it is close to it. …the impending collapse can no longer be denied, as is the case in Japan and Germany. …The extinction of a people and culture is always a global tragedy. It’s time for Japan — and the West — to wake up.
And I’m not overly enthralled by some of the other proposals.
Why not just pay people to have children? …If you lower the price of something, you will get more of it. Over the past two decades, Japan has spent trillions of dollars on mostly wasteful pork-barrel spending projects. It seems to me that the country would be better off today if that money had been spent on bonuses for second and third children instead.
P.S. Every so often, a celebrity from the entertainment world has an epiphany about greedy and corrupt government. It definitely happened for Jon Lovitz, Will Smith, and Rob Schneider. And it might be happening for George Lopez.
Healthcare in the form of Obamacare is a huge issue in the current political election.
Yahoo News Political Consultant Brian Goldsmith joined to break down the diverging plans of Hillary Clinton and Donald Trump. The divide between the two plans is stark.
In question, is the Affordable Care Act, commonly known as “Obamacare,” which was signed into law in March 2010 amid heavy contention. Passing along strict party lines by the narrowest of margins, it has become the focus for the current election.
“Obamacare itself is on the ballot,” Goldsmith said. Clinton says that she wants to preserve and improve it. Trump wants to repeal and replace it.
Its specific provisions are also being challenged. This includes the “individual mandate,” which requires that all Americans either buy insurance or pay a fine. It also could impact the subsidization of private insurance, the expansion of Medicare, and other insurance reforms.
Donald Trump: Repeal and replace Obamacare
Trump has said he wants to replace Obamacare with “something terrific.” While he hasn’t been very specific, his campaign has put out a few key elements of what his plan would include.
He would allow Americans to deduct the cost of health insurance from their taxes, he would allow you to buy health insurance across state lines, and he would allow Americans to import cheaper prescription drugs from overseas.
“He’s a bit off the beaten path in terms of Republican policy on health care,” Goldsmith said. “He’s been a long-time advocate for universal health care going back to at least the 1990s. He’s even described himself as a liberal on healthcare.”
Hillary Clinton: Preserve and improve Obamacare
Clinton wants to do two big things to improve Obamacare: expand access from 90% of Americans who have health insurance now to 100% and control costs, which are rising far faster than incomes.
In order to do this she, would expand tax credits, incent states to expand Medicaid more, allow undocumented workers to buy into the exchanges, move to pay providers for outcomes and not just for services, and expand access for rural Americans.
Clinton tried to achieve universal health care in the 1990s. When she failed, she successfully fought for the Children’s Health Insurance program.
When she ran against Obama in 2008, he actually opposed an individual mandate. She was for it. Obama then flipped on the issue after the election.
The bottom line:Clinton and Trump have starkly divergent views when it comes to healthcare, and especially given the contention over Obamacare, this is sure to be an important issue throughout the election.
Seven years after the Obamacare fight started, the House GOP will issue some talking points pretty soon.
WASHINGTON — House Republicans are going to reveal to the public next week what kind of health care reform they want instead of Obamacare. In anticipation, we thought a preview of conservative health policy ideas was in order.
Rather, Ryan will issue a broad outline Wednesday, which will differ somehow from all the other broad outlines congressional Republican leaders have tossed off since 2009, when the debate over the Affordable Care Act began.
It’s only been seven years, so they’ll surely tell everyone what they really want to do, how much it’s going to cost, how many people it will cover, etc., at some point. Next year? Or maybe 2018? (House Republican leaders are still ahead of their Senate counterparts, who don’t appear to be making any effort to define an Obamacare replacement.)
What we already know from news reports — and history — is that the contents of the House GOP proposal likely will be cribbed from previous Republican health care plans, like the ones touted by President George W. Bush in 2004, by Sen. John McCain (R-Ariz.) during his White House bid in 2008, by then-House Minority Leader John Boehner (Ohio) in 2009 and by presumptive Republican presidential nominee Donald Trump this year.
Because these ideas are all old and warmed over, they’ve all been analyzed ad nauseam, which makes it possible to evaluate the Ryan-backed plan — or at least get a sense of its general impact — before it even comes out.
When Ryan introduces this framework next week, we will return to the subject and give it another look. And if the House GOP has managed to find a way to cover more people than Obamacare at a lower cost with fewer regulations and no mandates, caps will be tipped.
The Huffington Post’s take on the likely components of the House plan assumes that the Affordable Care Act is fully repealed before any new policies are put into place, because that is the explicit goal of the Republican Party. As such, we compare the status quo, which is Obamacare, to what the GOP plan might do to it, including taking health coverage away from 24 million people — not to the world before the ACA.
And with that important note, here’s our review of conservative health policy’s greatest hits:
Get rid of the lines!
The idea: Let health insurance companies sell plans to consumers “across state lines” to increase competition and choice.
The problem: This policy has always been a Trojan horse. The notion is to deregulate health insurance by allowing companies to avoid states where rules require them to cover things like diabetes and autism — and then set up shop in states without those mandates.
And while allowing health insurers to go back to selling plans with meager benefits might be good for healthy people who won’t use their coverage, it’s bad for sick people and for states with more rules. If a healthy person from state A buys a skimpy plan from state B, insurers in state A lose a healthy customer, which is bad for business and could cause rates there to rise.
The idea: Take care of people with the greatest health care costs by enrolling them in so-called high-risk pool insurance that’s government-subsidized. That way, they’re covered and everyone else’s premiums go down because regular insurance no longer pays for the costliest patients.
The problem: This could actually work, if it were adequately funded (think of Medicare, which is sort of a high-risk pool for the elderly, people with disabilities, and kidney-failure patients). Except in the five decades since the first high-risk pools came to be, they’ve never been adequately financed, and it’s hard to see Republicans setting aside a lot of money for government-funded health care any time soon.
Make the sick pay more
The idea:Allow insurers to vary premiums, charging more to people with medical problems or at high risk of developing them. That way, healthy people wouldn’t have to pay as much for their coverage.
The problem: For a start, the whole purpose of all kinds of insurance is for many people to pay in so that few people can get benefits when they need them. Getting rid of what’s called underwriting — basing a person’s health insurance premiums of their health status and medical history — is one of the most popular things to come out of the Affordable Care Act, and for good reason.
To a lot of people, jacking up premiums on someone because they just got sick or used to be sick or might someday become sick seems unfair or even cruel. Plus, most of us — if we’re lucky — will live long enough to go from being the healthy person to the sick person, meaning we’d all become that customer paying more at the time we need it most.
Tax health insurance more
The idea: Alter the tax code to reduce or eliminate an existing preference for employer health insurance.
The problem: Starting around the time of World War II, the federal government decided that if your employer provides health insurance, then the premiums won’t count as part of your income. One goal of this decision was to boost job-based coverage — and it did.
But most economists believe the tax break creates an artificial financial incentive to provide employees with generous coverage, causing them to consume more health care and eventually drive up prices for everybody. It also disproportionately benefits middle- and upper-class people, who have the kinds of jobs that provide benefits, over the poor.
The solution, economists say, is to limit the tax break or, better still, eliminate it entirely. The Affordable Care Act actually includes a provision that would accomplish this, although Congress last year voted to postpone its implementation and the change may never take effect.
The risk of messing with this part of the tax code is that it could make insurance more expensive by taxing its cost, which could weaken the foundation of the employer coverage system. This would force people to look elsewhere for insurance.
That’s not such a big deal with Obamacare in place, since the law’s exchanges theoretically make private plans and Medicaid available to everybody, regardless of pre-existing conditions or ability to pay. But without the exchanges or some other similar mechanism for universal coverage, some people who lose employer insurance would end up without any coverage at all.
Lower prices for younger people (and higher prices for older people)
The idea: The ACA limits how much more health insurance companies can charge older customers to compared to younger ones to 3:1. This tends to make coverage relatively more expensive for young adults than before Obamacare, so some Republicans have proposed raising the ratio to 5:1.
The problem: It’s sort of self-evident: Older people, who typically have higher medical costs and greater need for insurance, would see rate increases. It’s roughly the opposite of what the ACA did.
Health savings accounts!
The idea: Letting people sock away money and spend it on out-of-pocket medical costs tax-free encourages saving and makes patients more like consumers who shop around for the best prices. A popular Republican proposal is to expand the use of these products and to let people pay health insurance premiums pre-tax, too.
The problem: These are great as a tax shelter and a way to buy the cheaper, high-deductible insurance that comes with it — if you can afford to save money, which most Americans demonstrably can’t. What’s more, the evidence suggests that patients make terrible shoppers. It’s very hard, if not impossible, to get reliable information about what medical procedures costs. Lay people often aren’t in a position to know even what questions to ask. And no one comparison shops during an emergency.
Make Medicaid better by shrinking it
The idea: Reduce funding for Medicaid, then give the states way more leeway to run the program as they see fit.
The problem: Medicaid is the largest single provider of health coverage in the U.S. It covers even more people than Medicare does, and the program as a whole is very expensive. States, which administer the program and kick in a bunch of the money, struggle to find adequate funding and usually must seek federal approval to alter benefits and eligibility.
To conservatives, the solution is obvious: Slash spending and let states make big changes, like dropping entire categories of enrollees, on their own.
Medicaid is already underfunded. It’s expensive because there are so many beneficiaries on it — including a lot of pregnant women, people with disabilities, and frail elderly in nursing homes, who are costly — not because it’s buying lavish care or full of waste. And it’s not like these people could get insurance some other way. By definition, the people on the program are either very poor, have disabilities, or both.
Smaller subsidies for fewer people
The idea: Health insurance is expensive, so giving people money — usually in the form of a tax credit — can help them afford it.
The problem: This actually is one of the most consequential parts of the Affordable Care Act. But the questions are: Who gets the money, and how much do they get? GOP plans that feature tax credits offer substantially less assistance to a lot fewer people, and some of them target that assistance based on age, not income. That would leave a portion of the neediest with little to no help and offer subsidies to higher-income households that may not need them.
Coverage for (some) people with pre-existing conditions
The idea: The pre-Obamacare market allowed insurers to reject customers based on their medical histories, and now they must accept anyone. Republicans don’t want to keep that, but they want to look like they are by proposing a guarantee that people who already have insurance won’t lose it if they get sick.
The problem: For one thing, federal law already offered a version of this guaranteeeven before the Affordable Care Act. More importantly, this could lock out anyone who doesn’t have coverage — because they can’t afford it, because they don’t think they need it — forever, leaving them uninsured when the time comes they actually need medical care.
Turn Medicare into a voucher program
The idea: Give seniors vouchers — a.k.a. “premium support” — and let them shop around for an insurance plan they like.
The problem: Today Medicare is a single government program that guarantees a fixed level of benefits; private insurers can offer alternative plans, but those policies are subject to strict rules that result in coverage that’s no less generous than what the existing program offers.
Conservatives would prefer a system with more free-wheeling competition among plans. The idea has been kicking around for a long time and, in some versions, traditional Medicare remains an option for seniors who want it. But the theory for the change is always the same: Competition would hold down costs better than the existing program does.
Or so the thinking goes. The problem with the theory is that Medicare is actually doing a pretty good job of holding down costs now.
Critics worry, plausibly, that voucher schemes are simply a roundabout way of giving seniors less health care. That’s particularly true when the sponsors of such plans have traditionally envisioned their plans yielding big savings that likely wouldn’t be possible unless the insurance seniors had provided much less coverage than it does now. Critics also worry — again, with reason — that traditional Medicare would not survive long in such a scheme, forcing all seniors to take private insurance.
Curb malpractice lawsuits
The idea: Limit jury awards in medical malpractice lawsuits
The problem: The medical malpractice system gets a lot of bad press, and deservedly so. Many well-meaning physicians operate under clouds of suspicion, particularly in high-risk fields like anesthesia and obstetrics.
Meanwhile, research suggests the system doesn’t serve patients particularly well, because only a relative handful of people harmed by medical negligence actually bring cases to court and win.
That’s why even some liberals have called for reforming malpractice laws in ways that would compensate more of these people while simultaneously introducing new safeguards that would deter negligence — and, ideally, avoid other kinds of adverse medical events as well. Systems like that already exist in some parts ofEurope.
But the usual conservative solution is simply to slap a limit on how much juries and judges can award in damages.
In this scenario, lawyers would be less enthusiastic about bringing cases, since their contingency income from winnings would be much smaller. In the absence of other reforms, the victims of malpractice would have even fewer sources of compensation than they do now.
And while limits on awards might reduce spending at the margins, since physicians would be less inclined to order up extra tests and practice other kinds of “defensive medicine,” most analyses have suggested the impact on the nation’s overall health care bill would be modest.
Last month, the Kaiser Family Foundation released the results of its 2016 survey of 671 people who purchased individual market plans compliant with the new mandates and rules established by the Affordable Care Act (ACA). As many insurers announce large premium hikes for next year and others announce they are withdrawing from the market, the survey reveals that enrollees are increasingly unhappy with their coverage. Given that these enrollees are one of the primary groups that Obamacare is supposed to be helping, their declining satisfaction is particularly concerning and suggests a change of direction in federal policy is warranted.
Growing Unhappiness with ACA Coverage
After incurring large losses selling Obamacare plans in 2014 and 2015, insurers significantly raised premiums and deductibles for 2016 policies and reduced the number of doctors and hospitals covered by plans. As the following table shows, these changes are correlated with growing dissatisfaction among ACA plan enrollees. Between 2015 and 2016, the percentage of enrollees rating their coverage as “not so good” or “poor” increased from 20% to 31%.
Enrollees were also asked to rate the value of the insurance for what they paid for it. In 2016, 45% of enrollees rated their insurance as a “good” or “excellent” value, down from 55% of enrollees in 2015. The fact that more people say their coverage provides “poor” or “only fair” value—even though a large majority of people with ACA coverage receive subsidies to reduce their share of the premium—reflects poorly on all the numerous requirements placed on individual market coverage by the ACA.
As I discussed in a piece last week, people who have high deductible policies are much less satisfied with their ACA plans than people with low deductible policies, which likely means that increasing deductibles are at least partly responsible for the growing dissatisfaction of ACA enrollees with their plans. Enrollees feel less financially protected with their coverage; 45% of 2016 ACA plan enrollees feel vulnerable to high medical bills, up from 38% of enrollees in 2015.
Plan Switchers Less Satisfied with New Coverage
As a result of the ACA, churn—people replacing plans each year—in the individual market has increased significantly. According to the Department of Health and Human Services, 43% of returning HealthCare.gov customers selected a new plan in 2016. Much of the churn has occurred as some insurers have stopped offering coverage (only 11 of 23 co-ops survived the first two years of the law), as well as ACA plan enrollees being relatively price sensitive and selecting lower priced plans.
The following table shows how ACA plan switchers compare their 2015 and 2016 ACA plans: 176 of the 671 survey respondents with ACA plans reported that they had ACA plans in both 2015 and 2016 and switched plans between the two years.
Overall, plan switchers are less happy with their current coverage than they were with their coverage last year. Individuals who switched plans are twice as likely to feel less financially protected with their new plan than more financially protected. Of plan switchers, 37% reported that their 2016 plan offers worse value than their 2015 plan compared to 27% who reported that their plan offers better value. Nearly twice as many people reported that their 2016 plan covers fewer doctors and hospitals than their 2015 plan as reported that their 2016 plan covered more doctors and hospitals than their 2015 plan.
New Direction Needed
As we approach the midway point of the third year of the enactment of the key tenants of Obamacare, it is clear that the law has produced adverse selection in the individual insurance market. Total exchange enrollment in 2016 is less than half of initial projections and the cost per enrollee is significantly more expensive than expected. The ACA made tens of millions of relatively young and healthy people worse off by reducing their choice of insurance and raising both their premiums and their taxes to finance its new spending.
Kaiser’s survey of ACA plan enrollees shows that many people who were thought to be key beneficiaries of the law are not satisfied with their coverage. Moreover, enrollees’ satisfaction with their plans significantly decreased over the past year as nearly 10% more enrollees viewed their coverage as an “only fair” or “poor” value than viewed their coverage as a “good” or “excellent” value. The growing dissatisfaction among ACA plan enrollees just adds to the reasons why Washington should make large scale changes to the ACA.
We reported this week in our Corruption Chronicles blog that President Obama lifted sanctions against the Communist state of Cuba despite it being an officially-designated terrorist state by his own administration! Here are the startling details:
In a quest to normalize relations Obama lifted sanctions against Cuba and celebrated being the first sitting U.S. president to visit the Communist island since 1928, but the Caribbean nation still appears on a crucial government terrorist list along with the world’s most violent Islamic groups. This contradiction indicates that, when it comes to our bloated government, the left hand doesn’t know what the right hand is doing.
Here’s some of the history. Before Obama “normalized” relations and lifted economic sanctions, Cuba for decades appeared on the State Department’s list of nation’s that sponsor terrorism. Its longtime communist regime is renowned for committing atrocious human rights violations and openly offering refuge to criminals on the run from U.S. justice. Among them is a Black Liberation Army leader on the FBI’s most wanted list after a prison escape following a conviction for murdering a New Jersey State Trooper. More recently, Medicare fraud ringleaders have escaped to Cuba after fleecing the U.S. government out of tens of millions of dollars.
Nevertheless, in 2014 Obama announced he was charting a new course in Cuba by “normalizing relations with a country just 90 miles off our coast.” This has included opening an American embassy in Havana (inaugurated with a flag-raising ceremony led by Secretary of State John Kerry), easing travel and export sanctions, reestablishing direct mail and establishing a bunch of “bi-lateral” commissions to deal with everything from human rights to human trafficking to business ventures and other shared interests. On May 29, 2015, the Obama administration rescinded Cuba’s designation as a state sponsor of terrorism, calling it “another step forward toward a more normal and productive relationship between the United States and Cuba.” Kerry had the final word on that.
However, Cuba still appears prominently—along with radical groups like Al Qaeda, Hamas and Hezbollah—in the latest Terrorist Assets Report released by the Treasury Department’s Office of Foreign Assets Control (OFAC). This is the 2015 report to Congress on assets in the U.S. relating to terrorist countries and international terrorism program designees. OFAC is the government’s lead office responsible for implementing sanctions with respect to assets of international terrorist organizations and terrorism-supporting countries. Its mission is to administer and enforce economic and trade sanctions based on U.S. foreign policy and national security goals, the report states. This means it administers sanctions programs targeting international terrorists and terrorist organizations and their supporters as well as countries that have been designated as a state sponsor of terrorism. Cuba is the country with the second-largest amount ($243.2 million) of assets frozen by Uncle Sam in 2015. Iran is the highest with nearly $2 billion. Sudan and Syria have $30.9 million and $25.9 million respectively.
“Based on available information, Cuba and each of the current state sponsors of terrorism own diplomatic and consular real property in the United States,” the new Treasury report says. “Cuba owns six blocked properties located in New York and Washington, D.C. Syria owns four blocked properties located in New York and Washington, D.C. Sudan owns seven blocked properties located in New Jersey, New York, Virginia, and Washington, D.C. Iran owns eleven blocked properties located in California, Illinois, Maryland, New York, Texas, and Washington, D.C.” The report also lists well-known terrorist groups whose assets have been frozen like Al Qaeda ($13,063,764), Hamas ($1,250,615) and Hezbollah ($8,277,178).
Weeks before this government document listing Cuba as a terrorist nation was released, the Obama administration let Cuban military and security officials access crucial U.S. military facilities in Florida. In April Cuban military agents, including the chief of investigations for the country’s National Revolutionary Police, were given a VIP tour of the U.S. Naval air base in Key West, Florida. A few days later four Cuban national security officials were paraded around the Joint Interagency Task Force South, which is charged with monitoring and intercepting illicit drug trafficking in a region that’s notorious for narcotics activity. A mainstream newspaper editorial pointed out that the National Revolutionary Police chief “is not someone you’d expect to see as an honored guest of the U.S. military” because “he plays a key law enforcement role in a state where beating and arresting human rights activists is considered law enforcement.”
We have previously reported that the terrorist organization Hezbollah established an operational base on Cuba. And earlier this year, we filed a Freedom of Information Act (FOIA) lawsuit against the U.S. Department of Defense to obtain records about American POWs during the Vietnam War who may have been held captive by Cuban government or military forces on the island of Cuba. (No records have been found about that issue, believe it or not.)
The Left has always had a soft spot for the anti-American Castro regime, citing socialist fantasy stories about government run health care and education programs that America should import from the murderous communists there. Obama’s ideological fervor led him once again to help a terrorist state. Let’s pray more American innocents don’t pay the price for Obama’s love affair with communist-controlled Cuba.
Some major and interesting developments occurred this week in the Clinton email scandal. Attorneys for Clinton IT official, Bryan Pagliano, confirmed for the first time that Mr. Pagliano has “use” immunity agreements with federal prosecutors investigating the Clinton email matter. Mr. Pagliano’s court filing lays it out:
In December 2015, Mr. Pagliano proffered testimony to the DOJ in connection with an ongoing DOJ investigation. A short time later, Mr. Pagliano and the DOJ entered into an agreement granting Mr. Pagliano limited “use” and “derivative use” immunity consistent with 18 U.S.C. § 6001 et seq. for that testimony and other testimony offered in connection with the same investigation. In response to the Court’s Order, Mr. Pagliano has today filed copies of his use immunity agreements with the Government, with a Motion asking the Court to maintain those documents ex parte and under seal.
Pagliano is the IT political appointee in the Clinton State Department who reportedly provided support for the Clinton email system.
U.S. District Court Judge Emmet G. Sullivan had issued a court order requiring Pagliano to produce any reported immunity agreement and identify the legal basis for the Fifth Amendment claim he planned to assert in Judicial Watch’s discovery. The order delayed Pagliano’s deposition, which had been scheduled for June 6.
In response to this, we filed an opposition motion to Mr. Pagliano’s attempt to file immunity agreements ex parte and under seal. We also asked the court to deny Pagliano’s effort to avoid videotaping of his deposition, during which he plans to assert his Fifth Amendment right.
Judicial Watch attorneys argued to Judge Sullivan that Pagliano’s immunity agreement should be made publicly available:
Mr. Pagliano’s request to file his immunity agreements ex parte and under seal is unfounded. First, the Court ordered Mr. Pagliano to file a memorandum, along with a copy of his reported immunity agreements. The Court did not order the immunity agreements to be filed ex parte or under seal and could have done so…as this Court has repeatedly emphasized, this case is about the public’s “right to know details related to the creation, purpose, and use of the clintonemail.com system.”
The brief also notes that the court can draw adverse inferences from any assertion of the Fifth Amendment in the civil lawsuit and that there is little chance that Pagliano could not answer some, if not all, of Judicial Watch’s questions without having to assert his Fifth Amendment rights.
In yet another development, the Obama administration today filed a “Statement of Interest” supporting continued secrecy of the Pagliano immunity agreements. The government’s brief states that “releasing Mr. Pagliano’s agreements with the United States could prematurely reveal the scope and focus of the pending investigation.”
This discovery arises in a Judicial Watch Freedom of Information Act (FOIA) lawsuit that seeks records about the controversial employment status of Huma Abedin, former deputy chief of staff to Clinton. The lawsuit was reopened because of revelations about the clintonemail.com system (Judicial Watch v. U.S. Department of State (No. 1:13-cv-01363)). Judge Sullivan ordered that all deposition transcripts be made publicly available.
It is unfortunate that the public’s right to know is being hampered yet again. These court filings are further evidence of the legal mess caused by Mrs. Clinton’s email system.
Simply put, we need to see Pagliano’s immunity agreements so our attorneys are able to prepare their questions for him – especially if he’s going to assert his Fifth Amendment privilege.
We have faced astonishing roadblocks to getting simple questions answered about the Clinton email system. But, as you will see below, we have persevered and managed to obtain information under oath.
Here’s a look inside the minds and thought processes of left-wing politicians brought to us by Dan Mitchell of The Cato Institute. Mitchell was accused with “Trading with the Enemy” because he defended the fiscal sovereignty of low-tax jurisdictions.
When I was younger, my left-wing friends said conservatives unfairly attacked them for being unpatriotic and anti-American simply because they disagreed on how to deal with the Soviet Union.
And just today, in a story in the Washington Post about the Center for Freedom and Prosperity (I’m Chairman of the Center’s Board of Directors), former Senator Carl Levin has accused me and others of “trading with the enemy” because of our workto protect and promote tax competition.
Here’s the relevant passage.
Former senator Carl Levin (D-Mich.)…said in a recent interview that the center’s activities run counter to America’s values and undermine the nation’s ability to raise revenue. “It’s like trading with the enemy,” said Levin, whose staff on a powerful panel investigating tax havens regularly faced public challenges from the center. “I consider tax havens the enemy. They’re the enemy of American taxpayers and the things we try to do with our revenues — infrastructure, roads, bridges, education, defense. They help to starve us of resources that we need for all the things we do. And this center is out there helping them to accomplish that.”
Before even getting into the issue of tax competition and tax havens and whether it’s disloyal to want limits on the power of governments, I can’t resist addressing the “starve us of resources” comment by Levin.
He was in office from 1979-2015. During that time, federal tax receipts soared from $463 billion to $3.2 trillion. Even if you only count the time the Center for Freedom and Prosperity has existed (created in late 2000), tax revenues have jumped from $2 trillion to $3.2 trillion.
At the risk of understatement, Senator Levin has never been on a fiscal diet. And he wasn’t bashful about spending all that revenue. He received an “F” rating from the National Taxpayers Union every single year starting in 1993.
Let’s now address the main implication of the Washington Post story, which is that it’s somehow wrong or improper for there to be an organization that defends tax competition and fiscal sovereignty, particularly if some of its funding comes from people in low-tax jurisdictions.
The Post offer[s] an inside look at how a little-known nonprofit, listing its address as a post office box in Alexandria, became a persistent opponent of U.S. and global efforts to regulate the offshore world. …the center met again and again with government officials and members of the offshore industry around the world… Quinlan and Mitchell launched the center in October 2000. …The center had two stated goals. Overseas, the center set out to persuade countries on the blacklist not to cooperate with the OECD, which it derided as a “global tax cartel.” In Washington, the center lobbied the Bush administration to withdraw its support for the OECD and also worked to block anti-tax haven legislation on Capitol Hill. To spread the word, the center testified before Congress, published reports and opinion pieces in leading financial publications, and drafted letters to lawmakers and administration officials. Representatives of the center crisscrossed the globe and sponsored discussions in 2000 and 2001, traveling to London, Paris, the Cayman Islands, the Bahamas, Panama, Barbados and the British Virgin Islands.
To Senator Levin and other folks on the left, I guess this is the fiscal equivalent of “trading with the enemy.”
In reality, this is a fight over whether there should be any limits on the fiscal power of governments. On one side are high-tax governments and international bureaucracies like the OECD, along with their ideological allies. They want to impose a one-size-fits-all model based on the extra-territorialdouble-taxation of income that is saved and invested, even if it means blacklisting and threatening low-tax jurisdictions (the so-called tax havens).
And, yes, that means we sometimes side with Switzerland or Panama rather than the Treasury Department. Our patriotism is to the ideals of the Founding Fathers, not to the bad tax policy of the U.S. government.
In any event, I’m proud to say that the Center’s efforts have been semi-successful.
In May 2001, the center claimed a key victory. In a dramatic departure from the Clinton administration, Paul O’Neill, the incoming Treasury Secretary appointed by Bush, announced that the United States would back away from the reforms pushed by the OECD. …fewer than half of the nations on the OECD blacklist pledged to become more transparent in their tax systems, a victory for anti-tax forces such as the center.
Even the other side says the Center is effective.
…said Elise Bean, former staff director and chief counsel of Levin’s Homeland Security Permanent Subcommittee on Investigations, which started investigating tax havens in 2001. “They travel all around the world and they have had a tremendous impact.” …“They were very effective at painting the OECD’s work as end-times are here for tax competition, and we’re going to have European tax rates imposed upon the whole world if the OECD’s work continued,” said Will Davis, the former head of OECD public affairs in Washington.
What’s most impressive is that all this was accomplished with very little funding.
Tax returns for the center and a foundation set up in its name reported receiving at least $1.4 million in revenue from 2003 to 2010.
In other words, the Center and its affiliated Foundation managed to thwart some of the world’s biggest and most powerful governments with a very modest budget averaging about $175,000 per year. And I don’t even get compensation from the Center, even though I’m the one who almost got thrown in a Mexican jail for opposing the OECD!
So while Senator Levin had decades of experience spending other people’s money in a promiscuous fashion, I work for an organization, the Cato Institute, that is ranked as the most cost-effective major think tank, and I’m on the Board of a small non-profit that has a track record of achieving a lot with very little money.
P.P.P.S. All things considered, I think the reporters who put together the story were reasonably fair, though there was a bit of editorializing such as referring to one low-tax jurisdiction as a “notorious tax haven.” When they write about France, do they ever refer to it as a “notorious tax hell”?
Also, when writing about trips the Center arranged for congressional staff to low-tax jurisdictions, the article stated, “The staffers reported receiving from $900 to $2,360 for the trips”, which makes it sound as if the staffers got paid. That’s wrong. The sentence should have read, “The staffers reported that the Center’s travel and lodging expenses ranged from $900 to $2,360 for the trips.”
The death spiral has finally hit Obamacare, at least in one state. GOP politicians in Alaska who say they are opposed to the law are creating a new fund to prevent it from collapsing.
Alaska has already lost several of the insurers on its Obamacare exchange. Next year it will be down to just one remaining company selling policies. That company, Blue Cross Blue Shield, will need to raise premiums substantially in order to cover costs. Faced with the possible collapse of the state’s exchange, which currently insures 23,000 people, the state’s Republican governor recommended passing a law to use state funds to keep prices down. Politico reports on the surprising turn of events:
The legislation, originally proposed by [Gov. Bill] Walker, sets up a $55 million fund — financed through an existing tax on all insurance companies — to subsidize enrollees’ costs as the state struggles with Obamacare price spikes and an exodus by all except one insurance company…
Republican state lawmakers, who sued Walker for expanding Medicaid under the health law, swear they remain opposed to Obamacare. But they say they’re doing what’s necessary to prevent health insurance premiums from spiraling out of control and letting thousands of people lose their coverage.
“What I’m getting — and I guarantee what the Alaska Legislature’s getting — is constituents pleading with them for help,” Sen. Dan Sullivan (R-Alaska) told POLITICO. “There’s been no state in the union more negatively impacted by Obamacare than Alaska.”
Alaskans already faced high costs but their Obamacare prices are the highest in the nation:
An analysis of average 2016 Obamacare premiums from Avalere Health, a consulting firm, showed that the lowest-cost “silver” level plan in Alaska cost $956 per month before any subsidies were factored in — the highest rate in the nation. That amount is 40 percent higher than the year before.
Alaskan Republicans face an unenviable choice. They can either put the program they didn’t want in the first place on state life support or they can let the market take its course, which will create more disruption for tens of thousands of Alaskans. Republican state Rep. Lance Pruitt tells Politico, “Are we trying to maintain ACA? I think what we’re trying to do is live within the new reality that’s out there.” In other words, they don’t really have much of a choice since the federal law mandates this.
Politically, having Republicans work to save the president’s signature achievement in a red state must look like a win for progressives. However it doesn’t seem like a win for Alaskans who are left with few choices and insurance that requires both state and federal subsidies to remain even somewhat “affordable.”