Paragon’s Work Featured Prominently By Wall Street Journal This Week

It’s always an honor when my work is published or cited in the Wall Street Journal, the nation’s premier newspaper. That happened three times this week as Paragon was out in front of the major health policy news. This news featured President Obama returning to the White House to tout the Affordable Care Act (ACA) and a proposed rule from the Internal Revenue Service (IRS) that illegally extends ACA subsidies. 

“To ‘Fix’ the ObamaCare ‘Family Glitch,’ Biden Politicizes the IRS”

Today’s paper contains my op-ed, which explains that the family glitch is not a glitch, but rather the result of the law Congress passed in 2010. 

Mr. Obama’s presence at the White House was ironic given that the IRS’s proposed policy reverses its decision from a decade ago, when he was president. At that time, the IRS believed it had to follow the law as written. The reversal shows that the enforcement of the tax code has become deeply politicized. Through this rule, if finalized, the IRS will expand ObamaCare subsidies by billions of dollars a year beyond what Congress authorized.

It’s necessary to offer some background. The ACA created large subsidies for people to purchase plans in the exchanges. However, the subsidies were so large that Congress needed to limit their availability for fiscal reasons. So it prevented people with access to an affordable employer plan from receiving subsidies. 
 
The ACA statute based affordability on the cost to a worker of self-only coverage. If a worker receives an offer of affordable self-only coverage, then the worker’s dependents who are also offered coverage are ineligible for subsidies—even if the employer contributes little or nothing toward their premiums.
 
A decade ago, the IRS and the Treasury promulgated rules on the ACA subsidies. Despite tremendous pressure at the time to implement a more expansive definition of affordability, they concluded that the statute was clear and that affordability was based on the self-only premium amount.
 
Here are two more key points from my op-ed, which are based in part on my experience at the White House working with both IRS and Treasury career staff:

  • “IRS career staff are loath to revisit settled tax policy questions, and they likely came under enormous pressure from the White House to renounce their decade-old position and disregard the law.”
  • “The legal and constitutional concerns are paramount, but the change is also bad policy. The Kaiser Family Foundation estimates that about five million people are affected by the glitch. Nine in 10 of them are currently covered by a spouse’s or parent’s employer plan. An illegal administrative fix would mostly displace private spending with government spending as dependents replace employer coverage with subsidized exchange coverage. The White House projects only 200,000 fewer uninsured.”

The politicization of the IRS is deeply troubling. In the piece, I recommend that Congress “get to the bottom of the IRS proposed illegal rule and take steps to check the overt politicization of the tax code.”

“About That ObamaCare ‘Glitch’”

In addition to running my op-ed Friday, the Journal’s editorial board took on the Biden administration’s unlawful actions on Thursday. The editorial board’s piece cited my 2021 Galen Institute paper, which took a deep dive into the statute and regulatory history. (I summarized the Galen piece and responded to a critique of it in a Forbes piece last year as well.) 
 
From Thursday’s editorial:

This coverage expansion is also legally dubious. As our contributor Brian Blase has explained, the formula wasn’t a glitch so much as a choice lawmakers made amid disagreements and constraints, particularly wanting to limit federal subsidy spending.
 
In 2013 even the Obama-era IRS ruled that the subsidy was tied to the cost for the individual. Congress has tried—and failed—to fix the glitch. None of this stopped President Obama from appearing at the White House this week to cheer this subsidy expansion that his own Administration didn’t think could be done without new legislation.
 
“If the family glitch is such a big deal,” as economist Doug Holtz-Eakin asked this week, and “can be easily rectified by a Treasury rulemaking, why didn’t President Obama and Vice President Biden fix it a decade ago?” The answer is that Biden Team is less concerned with the legal or policy merits than offering more “free” healthcare in an election year.

“Biden and the ObamaCare ‘Glitch’: Our current president says that the former president’s signature law still needs fixing. Does it ever.”

Finally, the Journal’s assistant editor James Freeman used the appearance of President Obama at the White House to review the impact of the ACA. Freeman noted that the White House’s use of the word glitch “will suggest to some people that the product is generally sound but just needs some fine-tuning. Yet it has failed by the most important measures.” 
 
Freeman graciously excerpted key parts of my testimony before the House Education and Labor Committee in February. Most of my testimony pertained to broader health sector problems, many caused by government policies, as well as a set of possible reforms. 
 
Some points I made in my testimony about the ACA that resonated with Freeman include:

  • Health outcomes have recently stagnated despite the ACA’s new spending and the significant expansion of Medicaid. American life expectancy was lower in 2019 than it was in 2013, before the ACA’s coverage and spending provisions took effect.
  • The ACA made individual market health insurance less affordable and introduced a generally inefficient set of subsidies. 
  • Nearly the entire net coverage gains from the ACA occurred through Medicaid expansion, although many people who gained coverage through Medicaid were, in fact, not eligible for the program. Enrollment in individual market… through the exchanges has largely been disappointing, falling far below original projections. 

After discussing my testimony, Freeman then cited the “late great Joseph Rago, who won a Pulitzer Prize for his brilliant Journal editorials” and the problems that he foresaw and foretold with the ACA. It is an honor for me to have a connection made between my work and that of Joseph Rago, who was simply one of the nation’s best writers on health policy. 

Best,
 
Brian Blase
President
Paragon Health Institute

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