Jessica Sanford will be the name of the day, one of the individuals the President held out as thrilled with Obamacare. But that was when Jessica was getting an entitlement under the law and before she was informed that she would not receive an entitlement.
Her case will be argued back and forth, and perhaps Jessica will likely “somehow” end up with her premium assistance, but for our purposes, Jessica highlights some of the real issues unfolding with Obamacare.
First, The large amount of money an individual can make and still be deemed “eligible” for premium credits indicates a legislative effort to soften the blow of how much health insurance costs and the increases to those costs that are NOT helped by Obamacare. When people earning between 100 and 400 percent of the poverty line are considered by the government needy enough to require help in paying insurance premiums and other costs, you’ve got a band-aid for the real problem, HEALTH INSURANCE IS TOO EXPENSIVE.
Second, 1402 of the PPACA allows for “readjustments,” such as Jessica’s letter. Because the eligibility is contingent on coordination of all sorts of information from the IRS, Homeland Security and HHS, all these sources can be used in determining whether the individual is in fact eligible, and reconsideration based on information gathered is acceptable.
Third, 1402 of the PPACA requires individuals to report changes in their circumstances that could impact the amount of free money they get. There are penalties provided under the law for those who don’t report accurately and try to get their free money illegitimately, but of course this is a gamble, whether an individual will be caught AND whether the individual will be unable to claim that it was all a mistake (rather than a deliberate connivance for free money). Likely, as in the case of HIPAA, most often the government will be satisfied that it was unintentional therefore requiring less devastating consequences including refunding the Treasury the free money unlawfully obtained.
Fourth and most significant is that the law provides for PREPAYMENT of free money by the Secretary of the Treasury to the insurance plans. If an individual taxpayer does not pay their portion and only the free money is paid then that taxpayer CANNOT be terminated for nonpayment before three months. The lag time and how the Treasury will get back the free money it spends for individuals who stop paying their share will be interesting.
I don’t agree with the entitlement created by Obamacare, and Jessica’s story highlights some of the reasons why.
First, it is an entitlement that cuts into other benefits formerly given to all citizens in the health insurance marketplace of our nation because for ordinary people, not only have insurance rates climbed, but the medical deduction available to EVERYONE has been reduced because only those amounts exceeding 10 percent as opposed to the former 7.5 percent of income are now eligible. So we’ve given free money to some and raised the tax burden on others, many of whom are earning the same amounts as those getting the handout but who work for someone else as employees. Employees are hit again because remember, employees have to pay a higher payroll tax a la Obama.
Second, the government’s pre-payment model presents difficulties and complications all in the attempt to reduce the cash outlay that individuals receiving the handout must make indicating what the PPACA does NOT do, it does not do anything to make health insurance more affordable. As a matter of fact, the claim today is that it will SLOW health insurance increases which is a non-promise because we don’t know what those increases would have been without it.
This pre-payment model is DEPENDENT ON EFFICIENCY AND HONESTY of all parties, individuals accurately reporting their incomes and government accurately determining whether individuals are entitled to the handout and that individuals are entitled to that handout throughout the year. Neither seems like a reasonable assumption at this point. For instance, if someone is getting pre-paid premium dollars and they decide they won’t pay their share, they have three months before their insurance can be terminated during which time the government still pays, they still have insurance.
Finally, the HOUSEHOLD INCOME requirement will require the IRS to coordinate all incomes of individuals in a household, it is not just about the taxpayer getting the handout. This means that accurate reporting and coordination of those reports will be necessary for all individuals in the household.
So, here are the provisions of the law:
1402 of the PPACA Part I-Premium Tax Credits and Cost-Sharing Reductions is the law creating the entitlement available to working individuals who are not eligible for employer insurance (that meets requirements of a “qualified” plan and does not exceed 9.8 percent of EMPLOYEE’S income for coverage for the EMPLOYEE) AND whose HOUSEHOLD income is between 100 and 400 percent of the poverty line.
One of the biggest flaws in the law is the allowance for PREPAYMENT of tax credits, meaning that instead of an individual purchasing the insurance and getting a tax credit at the end of the year based on income, et cetera, that under Section 1412 (c) Advance Determination and Payment of Premium Tax Credits and Cost-Sharing Reductions this credit is prepaid by the Secretary of the Treasury.
