Outrage over Congress/Staff in ACA Marketplaces

The latest outrage about the ACA is the agreement reached that will allow members of Congress and their staff to receive an employer contribution to buy insurance from ACA marketplaces (used to be called exchanges). If they didn’t get the same contribution from their employer (the federal government) that other federal employees get, then many staff and all members of Congress would have to pay the full freight of their insurance since their income would be above the level that would provide an income-based subisidy as provided by the ACA. Michael Cannon, for example says this is illegal, and amounts to a special deal that is a politically motivated attempt to keep Congress from re-opening the ACA.

Michael has made similar charges about illegal implementation of other aspects of the ACA, here is a detailed 79 page paper with Jonathan Adler (free download) arguing that the decision by the IRS to allow income based premium subsidies to flow to persons purchasing health insurance in federally-run state exchanges (like in North Carolina) is illegal. His co-authored paper is a very detailed argument (essentially a legal brief provided to ongoing litigation), and I assigned it for an undergrad class at Duke last Fall. The students had to write a paper deciding whether the implementation decision regarding federally run exchanges was indeed wrong as Michael argues (he also guest lectured in the class, and clearly and forcefully made his case to the students). Most of the students were not persuaded by Cannon, but some were (3 said such premium subsidies were clearly not allowed and illegal; 18 said they were allowed, and 4 had more nuanced views that essentially said they thought they were not allowed but that the IRS has lots of leeway in such cases). The point is about 25% of a group of very smart people bought Cannon’s arguments when looking closely, while 75% did.

One big difference in this latest outrage is the lack of a textual analysis done by Cannon (at least that I can find). I think that is because of what the text actually says in this case (Section 1312(d)(3)(D)).

ACA-Section-13121

The Office of Personnel Management (who deals with HR issues for federal employees) has issued this rule that requires members of Congress and their staff to buy insurance from the ACA marketplaces (as the ACA plainly says must occur), while having the same contribution towards their insurance that would otherwise be provided for their employer sponsored insurance still flow; they pay the difference. The text is silent about whether members of Congress and/or staff should still get their employer contribution toward insurance or not, and given that it seems a reasonable decision.

A bit more context enlightens further. This provision of the ACA was a Republican Amendment (offered by Sen Grassley, R-Iowa) in the Senate that was designed to embarrass the Democrats who the Republicans presumed would vote down this amendment. However, they agreed to it, and the text above is what the Senate agreed to (I think it passed 99-0). It is an odd amendment because employees of large employers (those with over 50 employees) are explicitly not permitted to purchase health insurance from the ACA marketplaces, but this section says that a subset of employees of the largest employer in the U.S. must purchase insurance in the marketplaces.

The case against this provision is weaker than is the other noted above (though I don’t agree with Michael on that one either). However, it is August, the season of town hall meetings, when the national outrage meter is set to 11, and the logic gives way to the noise.

cross posted at freeforall

Author: Don Taylor

Don Taylor is an Associate Professor of Public Policy at Duke University, where his teaching and research focuses on health policy, with a focus on Medicare generally, and on hospice and palliative care, specifically. He increasingly works at the intersection of health policy and the federal budget. Past research topics have included health workforce and the economics of smoking. He began blogging in June 2009 and wrote columns on health reform for the Raleigh, (N.C.) News and Observer. He blogged at The Incidental Economist from March 2011 to March 2012. He is the author of a book, Balancing the Budget is a Progressive Priority that will be published by Springer in May 2012.

5 thoughts on “Outrage over Congress/Staff in ACA Marketplaces”

  1. “That would close a loophole in the healthcare law that lawmakers worried could lead to a “brain drain” of talent and skill from Capitol Hill to private positions offering better salaries and more generous benefits packages.” The Hill.

    Wait, doesn’t a “brain drain” presuppose there are brains to be drained?

    Is there any empirical evidence to support such a change in situation since Twain? “Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself.”
    – Mark Twain, a Biography

    I will admit WWII conscription and Great depression unemployment may have temporarily forced beings with frontal lobes into the Potomac swamps.

  2. “All animals are equal, but some animals are more equal than others”
    “Four legs good, two legs better!”

    Honestly, why is anyone really surprised?

    “I’m shocked, shocked to find that gambling is going on in here!”

    1. Actually, I was quite surprised to learn here that Congress has to buy in the marketplace. Usually they exempt themselves from things. That must be why some of them are still so angry.

      1. Sigh. Look, the exchanges are for people who don’t get health insurance at work. Large employers tend to provide health insurance to their employees, as does the federal government *which is the largest employer in the nation*. Large employers have no trouble buying health insurance “in the marketplace” because the insurer’s risk is spread out across thousands (or tens of thousands, or more) of employees.

        Chuck Grassley offered the amendment to require Congress to participate in the exchanges purely as a political maneuver, expecting Democrats to vote against it, thereby giving Republicans a “talking point” against Democrats in the next election. Senate Democrats surprised Grassley by voting unanimously *for* his amendment.

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