ACA Repeal UPDATE - Sebelius Denies, BDaddy Checks the Facts

The Hill reported that HHS Secretary Sebelius is denying that she repealed Obamacare.  That wasn't the actual question, but she did say that there was not plan to delay the individual mandate until 2016 as the WSJ reported yesterday and I repeated on this blog.  That prompted me to review the policy in question.  Turns out... it's complicated.  But this is the ACA, what else would we expect?
If you want to read the relevant documents they are here, here, and here.  Here is how I break it down.

The March 5th memo states:

On December 19, 2013, CMS issued guidance indicating that individuals whose policies are cancelled because the coverage is not compliant with the Affordable Care Act qualify for a hardship exemption if they find other options to be more expensive, and are able to purchase catastrophic coverage.³ This hardship exemption will continue to be available until October 1, 2016, for those individuals whose non-compliant coverage is cancelled and who meet the requirements specified in the guidance. 

In English: hardship for cancellations extended.  The footnote links to the actual December 19 memo which applies only to cancelled policies that did not meet the ACA standards.  The actual change in policy is that the exemption for cancelled policies is extended to 2016.  The WSJ makes the point that there seems to be a lax standard for proving that one's cancelled coverage is a reason to opt out.  But that depends on how much scrutiny HHS gives to such hardship applications. Not mentioned is the real possibility, in my view, that such applications may be denied. Also, it is clear that the rule change only applies to exemption category 13, cancellations on the HHS Exemption Form.  This makes the sub-headline misleading: HHS quietly repeals the individual purchase rule for two more years.  What is not discussed in the article is that the cancellation process is different from other processes, because the individual must submit the hardship exemption to another insurer who offers catastrophic coverage before the exemption can be considered.

So what of the realities of the individual mandate.  Hardship exemptions do seem fairly easy to obtain, but the rub is that since the process is so arcane, no one is going to know how to do this ahead of tax filing time.  As a matter of fact, it seems likely that only the better educated and therefor more well off will file an exemption.  Here are some comforting words from the HHS on getting your exemption, from the "What happens next?" part of the form.

 Except for cancellations, send your complete, signed application to the address on page 4. We’ll follow-up with you within 1–2 weeks and let you know if we need additional information. If you get this exemption, we’ll give you an Exemption Certificate Number that you’ll put on your federal income tax return. If you don’t hear from us, visit HealthCare.gov, or call the Health Insurance Marketplace Call Center at 1-800-318-2596. See page 4 for next steps for cancellations. 

So what if you just don't pay?  Here is what the IRS has to say about that:

The IRS routinely works with taxpayers who owe amounts they cannot afford to pay. The law prohibits the IRS from using liens or levies to collect any individual shared responsibility payment. However, if you owe a shared responsibility payment, the IRS may offset that liability against any tax refund that may be due to you.

So, you are better off owing the feds taxes, which I have always told people, because they can't impose a lien.  

Bottom Line:

How much of an actual mandate still exists is a matter of conjecture and based on unknown future behavior of citizens and the HHS.  This is a set up for both tyranny and revolt.  

Let the Means Testing Begin - Sebelius Proposes Medicare Changes

I have always felt that means testing for Medicare and Social Security was inevitable.  Liberal groups have opposed the idea because means testing changes the entitlement programs from covert wealth redistribution schemes to overt wealth redistribution schemes. Liberals believe being overt, i.e. "transparent" about the wealth transfer would undermine popular support.  To which I reply, "Great, who cares?"  The programs are going bankrupt, popular support or otherwise, making them less important to the social fabric of the middle class, especially upper middle class will allow for some sensible discussion of further reform.  A recent letter to the NYTimes captures the liberal thinking quite well.

Social Security is our most successful antipoverty program, more successful than any welfare grants. Medicare is our most successful medical care program, more successful than Medicaid. In each instance the program available without means-testing works better, without stigma and with general approval and political support. Means-testing turns applicants into potentially fraudulent beggars for charity.
. . .
Entitlements without means-testing unite us into one country. Means-testing divides us into rich and poor, each resenting the other. Our tax system is a much more effective mechanism to deal with disparities in wealth and income.

The letter was responding to an Op-Ed piece by Yuval Levin discussing how the two programs might be means tested.  While I quibble with some of the particulars, I don't see any other long term solutions.

Right on cue, the administration's budget for HHS contains the following gem:

President Barack Obama’s plan to raise Medicare premiums for upper-income seniors would create five new income brackets to squeeze more revenue for the government from the top tiers of retirees, the administration revealed Friday.. . .“Means testing” has been part of Medicare since the George W. Bush administration, but ramping it up is bound to stir controversy. 

The plan itself is complicated. The bottom line is not: more money for the government. 

Obama’s new budget calls for raising $50 billion over 10 years by increasing monthly “income-related” premiums for outpatient and prescription drug coverage. The comparable number last year was $28 billion over the decade.

Inside the details of the plan are increases in premiums and a freeze on adjusting income brackets for inflation.  It is interesting to me only that the administration is floating this idea with little fanfare.  House Budget Chair Paul Ryan is asking Kathleen Sebelius for more details of the plan.  My hope is that this gets more publicity, so the nation starts to realize that we can really only afford to pay for medicare for the poor as part of a welfare program.