Monday, July 16, 2012

Looking Ahead: Obamacare and the Supreme Court's ruling

July 16, 2012

Dear Fellow Virginians,

This is the "looking ahead" Compass regarding the healthcare ruling by the Supreme Court.
I've already identified for you Justice Ginsburg's willingness to completely abandon her own legal position on the tax question (she said in oral argument it was NOT a tax) in order to uphold the bill.  And I passed along to you the extremely thorough, point by point refutation of Chief Justice Roberts' tax opinion - the part of his opinion in which he upheld the federal healthcare law.
Today, as we look ahead, there are two subjects for the states, including Virginia's Governor and legislature.  And there's one issue left for us citizens - repeal.  However much of this Compass you read, make sure you read the portion on repeal toward the end.
For the States

This past week I briefed about 1/3 of all of our Virginia legislators - Republicans and Democrats - about the choices they have before them on two issues: 1) whether to expand Medicaid under the federal healthcare law; and 2) whether Virginia should set up its own healthcare exchange, or simply default to the federal exchange that will be set up if Virginia does not act.
My own position on both questions is that Virginia should NOT proceed with either undertaking.  Once you decide, you should contact your Senator and Delegate to let them know what you think.

As of November, 2010, Virginia had approximately 850,000 Virginians receiving Medicaid.  That's about 10% of all Virginians.
The proposed ObamaCare expansion of Medicaid would add somewhere between 270,000 & 420,000 new recipients to our Medicaid rolls.  That's approximately a 40% increase!
Right now, Virginia spends about $3.7 billion of our state money on Medicaid, and the feds contribute about the same amount, for a total Medicaid expenditure in Virginia of about $7.4 billion.
One of the results of the Supreme Court's decision was to block the feds' threat to cut off Virginia's entire $3.7 billion of federal Medicaid money if we didn't enter into the massive Medicaid expansion.  That threat didn't leave Virginia with much choice; however, now we can choose on the merits whether to undertake the Medicaid expansion.
The feds are still using a lot of bait to try and coax states to choose to undertake the expansion.  For the first three years, 2014-16, the feds say they will cover 100% of the costs of providing Medicaid to the new additions.  However, starting in 2015, we have to pay 50% of the administration costs.
In 2015, the admin costs will be approximately $10 million, then about $20 million in 2016 and gradually rising thereafter.
Mind you, these promises are coming from a government - the federal government - that is broker than broke.  If the federal government were a person, he'd have an annual salary of $22,000, be spending $38,000, and he'd have a credit card debt of about $162,000.  Would you trust that guy to come through with promises to pay big bucks a few years down the road?
After 2016, Virginia picks up 5% of the cost of the new recipients rising to 10% by 2022, at which time, we'll be spending several hundred million more dollars every single year.  So, the obvious question for those that want to the expansion is, "where is that money going to come from?"  An already struggling transportation system?  Higher taxes?  Even President Obama says (well, he used to say...) that raising taxes on a struggling economy is a bad idea.
Looking backwards over time, it's important to know that Medicaid has exploded within the Virginia budget - from about 5% to nearly 20% today.  And Virginia's experience is not unique in this regard.  Medicaid has been eating out the other parts of the budget for years... is this a part of the budget that we really want to voluntarily grow?
I hope not.  Not if I were Governor.
There is no deadline (yet) for Virginia to make this decision.  However, once we get in, we're at the mercy of the federal government.  If we want to get out once we're in, we have to get their permission.  What do you suppose are the odds of that?
Finally, ObamaCare was hoped by its proponents to cover 34 million Americans who are not now insured.  Approximately 16 million of them were going to be covered under these Medicaid expansions.  Of course, that doesn't "insure" them, rather it puts them on the welfare rolls.  Nonetheless, ObamaCare was heavily reliant on this Medicaid expansion to achieve their purposes.  Given that at least a half dozen Governors have already said their states won't participate, it's clear that this part of ObamaCare is not even going to achieve the goals of its proponents.
Healthcare Exchanges
A more complicated question is whether Virginia should set up its own healthcare exchange under ObamaCare.  And there is a statutory deadline on this question: November 16th of this year - 10 days after election day.  I said there's a "statutory deadline" because the law says one thing, but the administration is demonstrating their usual respect for laws - even their own laws - to suggest that the November 16th deadline may not be "final."  They are looking at a regulation that would allow more time for states to decide to set up their own exchanges.
So, what are the issues to be considered?
For some federal laws that states administer, like the Clean Water Act, states have a lot of discretion about how to implement the law.  That allows us to craft regulation that best fits Virginia.  However, under ObamaCare, it is not clear that we would have much flexibility about how to implement an exchange.  And if that's the case, why bother with a state exchange?
The current estimate for operating the exchanges is between $6-$25 million per year.  And for what?  To have the privilege of being the enforcement arm of a federal healthcare takeover that we don't agree with?
To add a VERY interesting wrinkle, there's a second consideration that's hard to get our arms around.  It was first advanced by my friend, Michael Cannon, at the Cato Institute.
The text of ObamaCare has lots of mistakes in it, or at least they appear to be mistakes.  One of them relates to the penalties that employers must pay if their employees end up in the healthcare exchange in their state.
Employers, you know, those folks that hire people and give them jobs?  Yeah, those.  Employers have to pay $2,000 or $3,000 penalties if their employees don't have health insurance that meets the federal standard and who end up in the healthcare exchanges.
Or maybe not...
Warning: read slowly - double negative coming...
The text of ObamaCare does not apply the penalties to employers whose states do not set up the healthcare exchanges.
Let me say that differently.  Under the text of ObamaCare, for those states that do not set up their own healthcare exchanges and instead default to the federal exchanges, their employers will not have to pay the two or three thousand dollar penalties per employee.
Those employer penalties were expected to be the financing source for the folks that ended up in the healthcare exchanges.  Whoops.
So, if Virginia does NOT set up a healthcare exchange under ObamaCare, then Virginia's employers that do not conform their insurance to the "minimum requirements" of ObamaCare will have a defense against paying the stiff penalties.
Naturally, the Obama administration is trying to counter this.  They are passing an IRS regulation that purports to "fix" this problem.  However, it is basic law that statutes trump regulations... of course, that assumes that courts uphold the laws as written.  What a concept.
Last, But Definitely Not Least - Repeal

I'll be blunt (something new for me).
One "advantage" of how the Supreme Court upheld ObamaCare is this: because they upheld the law as a tax, it only takes 50 Senators and a Vice-President to repeal ObamaCare, not 60.
Why?  Because a bill to repeal a tax (ObamaCare is now a tax) is a revenue bill, it is not subject to filibuster.  Thus, a simple majority will do the trick.
Wow.  This means it's in our hands now.
Governor Romney has long been saying he'd repeal ObamaCare, but to do that a repeal bill would have to get through the Congress and to his Presidential desk.
Under any ordinary ruling by the Supreme Court, that would have taken 60 votes to get by a Senate filibuster.  However, because the Supreme Court only upheld ObamaCare as a tax, we don't need to get to 60!
I don't think it was ever reasonable to think we could get to 60 votes for repeal even with a great year in the 2012 Senate races.  But 50!  We can get to 50!
Virginia is going to be a big part of that 50, with a hot race between George Allen and Tim Kaine that can help us get one of the small number of votes we need to get to repeal!  And Tim Kaine was ObamaCare's biggest cheerleader and he hasn't backed away from it even as we've all learned that it's much worse than it even appeared when it passed.
Needless to say, George Allen has been hammering away about repealing the law.
So, here in Virginia, we're a swing state in the Presidential race AND we have one of a small number of Senate races that will help decide repeal.
It's in our hands folks!  So don't sit on the couch between now and November.  You don't win any votes watching the news!  We need your help knocking on doors, making phone calls and working events.
If you're not plugged in yet, please email my political director, Noah Wall, at, and he will get you plugged in!
As the first to fight ObamaCare in America, and having kept up that fight for almost two-and-a-half years, I can go four more months to win this!  How about you?!  I hope I'll see you on the campaign trail, working to knock out the most anti-liberty, economy suffocating President in my lifetime.
See you there!


Ken Cuccinelli, II
Attorney General of Virginia

Paid for and authorized by Ken Cuccinelli for Governor

Ken Cuccinelli for Governor, 10560 Main Street, Suite 218, Fairfax, VA 22030

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