Shining the Light on Tax Cronyism

cronies

Image credit: The Economist

Virginia has one of the least transparent systems in the country for reporting tax carve-outs for special interests, reports the American Legislative Exchange Council (ALEC) in a report on tax cronyism, “The Unseen Costs of Tax Cronyism: Favoritism and Foregone Growth.” While five states report nothing at all, Virginia is one of eight that ALEC classified as “infrequent or incomplete” in its reporting.

The most recent report was in FY 2009. Individual and corporate tax breaks in Virginia amount to $791 million, or more than two percent of the budget, ALEC reports.

ALEC also cites a New York Times study of targeted business incentives, which typically entail tax breaks, that identified 1,125 Virginia grants to companies. While Virginia’s tax carve-outs pale in comparison to, say New York’s (more than 50,000 grants to companies), it is massive compared to Wyoming (only 8) or even neighboring Maryland (260).

“Cronyism,” writes ALEC, “refers to the use of public policy to benefit a specific industry, firm, or individual, as opposed to setting broad and generally applicable rules and polices that apply to society as a whole.” While tax preferences can be used to induce corporations to invest in a state, the cumulative result is to shift the tax burden to existing companies with less political clout, thereby, inhibiting their growth of those firms — and the state economy as a whole.

Government does not know which firms will provide innovation, employment growth and tax revenue growth for the state. Empowering government to cater to a few high-profile firms while not fixing underlying problems in the state tax code is poor policy, as policy makers and bureaucrats are unlikely to outperform diversified market performance relative to their narrow picks.

ALEC advocates eliminating special tax carve-outs in a tax-neutral fashion by decreasing general corporate tax rates. If cronyism cannot be eliminated entirely, inducements should be restructured from the tax breaks (which tend to be permanent and rarely subject to review) to budgetary outlays (where the spending is subject to annual review). At the very least, tax cronyism should be subject to rigorous reporting standards to ensure transparency.

Bacon’s bottom line: Yeah, yeah, I know, ALEC is a tool of the evil oil-guzzling Koch Brothers and, therefore, everything it says and does is ipso facto tainted and illegitimate. But can we, for once, focus on the merits of ALEC’s arguments instead of the provenance of its funding? I think ALEC’s tax principles are sound, and the evidence suggests that Virginia’s practices fall far short of openness and transparency.

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27 responses to “Shining the Light on Tax Cronyism

  1. The key to understanding this article is found in two sentences, namely:

    “Cronyism is the substitution of political influence for free markets. It comes about when government has a lot of power over private-sector decisions and when the government officials in power have great discretion over how to use it.”

  2. Bacon – you have been brilliantly duped by the Koch Brothers. Those boys hate taxes, love tax breaks and never met a special interest they didn’t like (except the unions). But, of course, they can’t just come out and say that. So, they go into mock indignation over Virginia’s tax breaks but then estimate those breaks at $791M per year. You take that bait like a largemouth bass hitting a rubber worm. The only thing that matters in that article is their estimate of $791M per year or 2% of the budget. Whether you love ALEC or hate ALEC – 2% of the budget? Certainly, there must be something more important to worry about.

    What a brilliant deflection.

    Meanwhile, JLARC seems to have calculated a somewhat higher number …

    “From beehives to bullion to burial urns in space, no commodity is considered too arcane for a tax break.

    A recent government report found nearly 200 tax breaks that together cost Virginia $12.5 billion a year – almost as much as the state collects in taxes.”

    http://hamptonroads.com/2013/01/virginians-shoulder-billions-each-year-tax-breaks

    $791M vs $12.5B? 2% vs 50%?

    No doubt your response will be that the two studies are measuring two different things. Well … yeah. By design. JLARC wants us to know how much the Imperial Clown Show in Richmond squanders each year and the Koch Brothers want us to know that the total amount of these tax breaks is an almost immaterial percentage of the budget.

    Who is right? Nobody knows.

    From the same article …

    Del. Scott Surovell, D-Fairfax County, said he doesn’t think the political will exists yet to tackle the issue in a serious way.

    Surovell introduced a measure last winter, which he dubbed a “sunshine bill,” seeking to have the names of all recipients of tax credits worth more than $1,000 published on the state Department of Taxation website. Surovell’s rationale: Public scrutiny of tax breaks might focus lawmakers’ minds on the issue.

    “The problem with these things is, once they go into effect, it’s impossible to measure their effectiveness – whether they’re being used for the purpose they were intended or whether they’re accomplishing anything – because the people who claim the benefit are completely confidential,” Surovell said. “It becomes very opaque.”

    Surovell’s bill never made it out of committee.

    Let’s review the characters in this play:

    1. Special Interests in Virginia: Willing recipients of a fortune in taxpayer funded handouts.

    2. The Imperial Clown Show in Richmond: Empty suits who occasionally don Santa Clause outfits to hand out big ticket presents to the special interests who finance their campaigns, offer them jobs and buy them Rolexes.

    3. ALEC: Artful dodgers who wave their hands in one direction to distract people from looking in the other direction.

    4. Jim Bacon: Unwitting enabler.

  3. ALEC? Not the Center for Budget and Policy Priorities or some other AFL-CIO affiliated group. Interesting.

    The use of the term “tax cronyism” as opposed to the more neutral “tax preferences” is the first red flag. The term “tax expenditure” is another red flag I would not expect to see waved by ALEC (or Jim Bacon.) ALEC goes Tea Party.

    The basic premise is that treating individual companies or individual industries to special rules makes it that much harder to cut overall rates for everybody. That is a pretty popular argument with small business types. In a perfect world I could go for that. Still looking for that perfect world. In this world I doubt overall taxes would go down.

    The counter argument in most cases is 1) absent the preferences the economic activity would go somewhere else and 2) when done right, the ROI on the jobs and the cap ex that are created or retained is still highly positive for the taxpayer — not just the stockholder. There was a court case a while back that might have resulted in a federal law prohibiting these job-buying battles between states, but it failed and to some extent this is the price we pay for the federal system.

    You protest — this is about in state tax preferences, but the argument is usually about competing with other states (says the man who just helped pass an industry-specific tax preference bill.)

  4. Steve Haner says:

    “The counter argument in most cases is 1) absent the preferences the economic activity would go somewhere else and 2) when done right, the ROI on the jobs and the cap ex that are created or retained is still highly positive for the taxpayer — not just the stockholder.”

    Is there a number 3 possibility. How about “When done wrong? ” What are the range of possible consequences then? And might some of those consequences also apply “when done right” as you’ve defined the term?

    And how would most of our legislators and their “business friends” fill their days and coffers absent this sort of activity which they relish so much?

    • With a few exceptions, most tax preferences should have either sunset clauses or be reviewed on a schedule. It can be done wrong. Or circumstances change, or the tax break has accomplished its purpose and is no longer needed. Sometimes there is no public policy argument other than that the entity doesn’t want to pay the same taxes as everybody else. Having said they are not all bad, I’m just as certain they are not all good.

      • I agree with sunset clauses. However, I would like to see constitutional amendments that require a super-majority for all tax rate changes and creation of new tax preferences.

  5. Any organization that has employees or principals that lobby should be a taxable entity. Only pure nonprofits with volunteers who don’t get paid should be exempt.

  6. I’ll tell you what impresses me. It’s these Think Tank reports – like this one that took one or more people quite a bit of time to compile and ALEC paid them a salary to do it and I always wonder where that money came from.

    I always thought in Virginia we had JLARC and the Auditor of Public Accounts doing – what I thought was a decent job but if Alec has, instead used other sources to develop their info – maybe it’s actually a reflection on JLARC and APC .. for not really getting to the data.

    Be that as it may – it’s the Feds that really drive this bus.

    The Fed have more than a trillion dollars in tax expenditures for things like employer-provided health insurance and stepped up capital gains which never shows up as taxable income. Other deductions on Page 1 of the 1040 further reduce the AGI which Virginia uses as the starting point on it’s tax calculations.

    One thing I don’t know is how much Virginians pay in individual income tax vs what businesses pay in income tax. Businesses are also subject to further taxation at the local level for machinery and tools and BPOL.

    At the Federal Level, it looks like this:

    Individual income tax and tax ………………….. 1,374.0
    FICA tax ………………………………………………….979.0
    Corporation Taxes…………………………………….317.8

  7. Here’s the JLARC Report:

    Review of the Effectiveness of
    Virginia Tax Preferences

    COMMISSION DRAFT — NOT APPROVED

    http://jlarc.virginia.gov/meetings/November11/TaxPref.pdf

    worth reading…

  8. Note that the really, really large tax preferences are not business related by apply to favored categories of individual voter, er, I mean citizen.

  9. the largest Federal tax expenditure – bar none – is the 250 billion dollars that is exempted for employer-provided health insurance – something the GM Mercatus Center has opined about:

    http://mercatus.org/publication/tax-exemption-employer-provided-health-insurance

    Summary

    Among the greatest economic distortions created by the tax exemption for employee-provided health care: restricting workers’ freedom to leave one job to find another better suited to their capabilities; limiting workers’ ability to choose the health insurance that best suits their needs; and limiting competition and driving up costs in the health insurance market.

    Labor Market Distortions

    Job Lock. Americans fear how losing or changing jobs will affect their health care and are thus less likely to leave one job to search for another that better suits their skills. Negative effects include: The ultimate result is lower returns for investors, including retirees.

    Employers have more leverage over employees; voluntary employee turnover is reduced by 25 percent in businesses providing health insurance, one study found.

    Small businesses are at a competitive disadvantage in recruiting labor, as they typically must pay more for insurance benefits, and therefore are less likely to provide health insurance than large firms.
    Businesses and workers are less efficient, as resources are unable to flow to their most productive outlets.

    Higher Health Care Demand, Higher Costs

    The tax exemption for employer-provided health insurance has increased the number of employers that provide health insurance; it has also increased the amount of health coverage purchased.

    This increase in demand for health insurance and health care has contributed to the rise in health care prices in recent decades and further increases the job lock effect.

    • Larry, I’m pleased to see you are coming around on the issue that higher demand means higher costs. Are employees covered by health care plans likely to use their coverage for medical care than if they didn’t have it? Absolutely. Are those covered by Medicaid (for little or no payment) likely to use their coverage for medical care than if they didn’t have it? Yes too.

      But those who have coverage at work are earning their benefits. Shouldn’t society reward those who postpone gratification and obtain knowledge and develop skills that are needed in the economy?

      And if we tax the value of employer health insurance contributions, shouldn’t we also tax the value of taxpayer-paid health coverage? If not, why not?

  10. well FIRST – we should treat ALL employees who work and need health insurance the SAME WAY and not have a system where some receive govt tax deductions and protections and others do not.

    Next – the complaint against Ocare is amusing because it requires that insurance cover certain screening and periodic care while having higher co-pays and deductibles to have more skin in the game and catastrophic to protect against bankruptcy.

    in terms of your last question – did you KNOW that your question was addressed in 1918?

    http://www.allhealth.org/briefingmaterials/rl34767-1359.pdf

    see: ” Revenue Act of 1918″

    TMT – if you want to fix health care – you need to do to empoyer-provided what the ACA does.

    include basic screening and periodic care with no co-pay and deductibles; provide catastrophic and everything in between – require substantial co-pays and deductibles.

    OR get rid of HIPAA that provides about 40% in tax breaks for health insurance and let people go look for insurance in the market.

    but don’t do this – don’t give one set of people tax breaks and protections against pre-existing and low deductibles and co-pays then blame efforts to provide tax breaks and pre-existing protection to others who have to buy their insurance out of pocket.

    here – take a look at what the Mercatus Center says:

    The Federal government does not tax health insurance when employers provide it to their employees as part of a compensation package. This tax expenditure is the largest “loophole” in the federal tax code, resulting in nearly $300 billion in forgone revenue in Fiscal Year 2012, according to the Office of Management and Budget. Even worse for the economy, the tax exemption for employer-provided health insurance creates significant distortions in the labor and health insurance markets.

    A new study from the Mercatus Center at George Mason University looks at the major unintended consequences of the tax exemption of employer-provided health insurance and the problems created by its market distortions. The study concludes that taxing health insurance and simultaneously lowering marginal tax rates would better serve most Americans and the overall economy.

    To read the study in its entirety and learn more about the authors, see “The Tax Exemption of Employer-Provided Health Insurance.”

    Key Findings

    Many of the United States’ current health-care-related problems—from lack of choice and competition to rising costs—stem in part from the tax exemption for employer-provided health insurance.

    Eliminating the tax exemption cannot be a stand-alone change; the resulting tax increase on all working Americans should be offset with an equivalent reduction in tax rates.

    This would eliminate many distortions to the health insurance market without a net increase in taxes.
    This combination of reforms would also yield higher economic growth and a more flexible labor market, which in turn would increase tax revenue in the long run.

    Eliminating the tax exemption would allow employers to increase employees’ pay by the same amount (about $12,000 annually, on average) that they currently spend on health insurance.

    Workers could use this extra income to shop for health insurance that best meets their individual needs.
    It would eliminate “job lock,” where employees feel “locked in” to their current job because they will lose their health insurance if they quit to search for a new job, by allowing workers to keep their health insurance if they change jobs.
    It would also likely leave workers with more money, even after buying insurance.

    • Let’s tax everyone, including those who receive government health benefits. Have a larger personal exemption.

      Your logic is faulty my friend. All employees aren’t the same. Some produce more and others produce less. The market tends to reward those who produce more better than others. Your logic would require Best Buy to treat my son who has been working there since last winter the same as the Feds treat my wife who is a patent lawyer with almost 30 years experience. She has more benefits than he does. More pay; better vacation; etc. It seems quite fair to me. Some people earn better health insurance plans than the ACA offers. Why do you want to steal what they have earned?

  11. some do produce more and some do produce less but you can’t tell that by the employer offering insurance or not.

    my logic says that it’s not the market that is offering the tax deductions and pre-existing protections. It’s not a reward for productivity. It’s a govt benefit not an employer benefit.

    If the govt did not offer the tax breaks and other protections – how would that be any different or better than market insurance?

    it’s the govt that provides the benefit and if the govt is going to do that – then it should do so – equally – without pre-judging who is productive or worth more or not – just that people do work and are entitled to equity from the govt.

    I don’t want to steal anyone’s insurance. Why is it that providing people with the same benefits is “stealing”?

    people do not “earn” the govt tax breaks. everyone who works and buys insurance is entitled to the same treatment.

    why would you have the govt determine that some folks should get tax breaks for health insurance and others not and then when we decide to offer the same benefit to everyone who works – it’s called “stealing”?

  12. TMT – the way you characterize this is to say that ALL employees of a company are “productive” or “valuable” according to whether the company offers insurance or not. And companies that do not – ALL of their employees are marginal in terms of productivity.

    ALL successful companies are productive and rely on productive employees, but their business model may not permit them to pay the same benefits as other companies but the real kicker here is that if they do not provide such benefits then taxpayers pick up that tab.

    Let me take the example of a company that offers insurance to ALL of it’s employees – from the CEO – to the entry level clerk in the accounting dept.

    they do not divide up who they offer insurance to based on their value and productivity to the company such that only the highest value employees get offered health insurance.

    That entire premise is just patently false.

    Beyond that – it’s NOT the company that offers the insurance which is superior to market insurance. What makes it superior is that the gov provides it tax-free which is about 40% of the value and the govt is the one
    that assures that no employee will be denied insurance on pre-existing conditions – not something the private market did – before Ocare.

    so what enabled employer-provided to make it superior to market insurance – is the govt.

    and whether or not a company chose to provide employer-provided had no thing what-so-ever to do with the individual productivity of it’s employees.

  13. Larry, your argument still fails in several ways. First, everyone who gets employer-paid health insurance is treated alike for FIT purposes. Right? Market factors, including the nature of the employer’s business, determines what type health insurance employees receive. Government employees, utility employees, big manufacturer employees (for example) tend to get better heath insurance than people who work for smaller businesses. (That’s why single payer will never happen. To go to universal coverage, a lot of people will be forced to see their benefits cut and probably substantially. They would cause a huge backlash that would likely prevent single payer.)

    Second, even if the tax exempt status for employer-paid health insurance were limited or eliminated, some people would have better coverage because they are better producers; their employer is in a business with lesser competition; their employer has more purchasing power; etc. The guy or gal who works nights at 7-11 simply is not going to get the same coverage as the sales director at Verizon Wireless. Even if you are tax neutral, some will be treated better than others. Or do you really want to require every one to be able to have only ACA plans? Are you ready to go the Fairfax County teachers and say “we are taking away your tax exemption and cutting back on your benefits”?

    Third, even with tax neutrality, many will not be able to afford the same level of insurance? And if the government subsidizes some, you no longer have tax neutrality unless the low-income pay FIT on their government subsidy.

    Fourth, even in a tax-neutral and mandatory equal coverage world, there are still many people who can afford to pay for more health care treatment. Look at plastic surgery. It’s not tax deductible and rarely covered by private insurance. Yet it’s still there. Are you going to prevent them from having better access to health care than those in the middle who you’ve just taxed and cut their coverage? How is that fair except in the mind of a Democrat who savage the middle to benefit the poor (and in the case of Obama, those living here illegally) while protecting those at the top?

    As JFK said “Life is not fair.”

  14. TMT – what should market determine whether the Govt provides a tax exemption or not?

    2. how many people would have better coverage if the got did not prohibit denial of insurance for pre-existing?

    3. – not being able to afford the same level of insurance is not the same as NO insurance… the lowest cost plans in the ACA provide no-copay screening and routine care and catastrophic but higher deductibles for more discretionary care.

    4. – TMT – we’re not talking about plastic surgery and I’d never advocate that ANY insurance – public or private pay for it – if it meant others in that pool would be paying premiums to pay for it.

    that’s exactly what is wrong with employer-provided – Did you not read the Mercatus report?

    I’d prevent NO BODY from being able to pay more to get more – but that’s not core insurance which is the issue.

    You’d deny basic insurance to people – why? because they are “less productive” or can’t afford a Cadillac policy?

    why don’t you go on healthcare.gov and look at some of the plans guy.

    they provide basic insurance that provides screening and periodic routine care – that detects and treats disease early and catastrophic in case they do need it but in the middle – the big hit coming from the opponents is that the co-pays and deductions are high.

    that’s exactly what you DO want – to keep costs down.

    why do you oppose FINDING A WAY – to allow people to have some level of insurance instead of you and I paying for charity care ?

    it makes no sense and it’s mean spirited…

    • Larry, if the tax exempt status of employer-paid insurance were eliminated and replaced by a general credit or lower tax rates for all, such that the amount of an employer’s payment was added to an employee’s gross income, would you support adding the amount of taxpayer contribution to a person getting subsidized insurance as an addition to that person’s gross income? Let’s say there is a $10K credit. Joe gets coverage worth $15K and pays tax on $5 K. Pete gets coverage worth $9 K and pays nothing. Harry gets a government subsidy of $8 K and pays nothing. Walter gets a government subsidy of $12K and pays tax on $2 K. Is the model you prefer?

      Would you support the freedom for employers to provide better insurance coverage to its employees (subject to the tax consequences) than is available as subsidized coverage? Mary gets coverage worth $18 K that includes a $2000 deductible, paying tax on the $ 8K. Joan gets coverage worth $10K and a $6000 deductible and pays no FIT.

      Would you support the ability of a company to reimburse the taxes paid by key employees for health care insurance? Companies often do this for employee trips or moving expenses? Ann gets coverage worth $20 K, but her company pays the FIT on the $10K and on the taxes levied on the $10K and on and on. Jim who works for the same company gets coverage worth $12 and pays FIT on $2K with no reimbursement.

      And with this type of insurance reform (which, of course, has other details), no medical practitioner or facility can get a dime from the government for uncompensated care. Am I understanding you correctly?

  15. TMT – the very first thing that needs to be recognized is the Govt role.

    If you take the govt out of employer-provided health care – period –
    what happens?

    At that point the employer is totally free to do whatever they want – with regard to compensation and benefits.

    And insurance companies would be free to provide group health on whatever terms they wished – such that the employer could offer it to only employees that did not have pre-existing and each premium cost would be tailored to the individual in terms of health status and age.

    If the govt were not involved – why would any employer want to provide market-insurance to eligible employees rather than just let them go out into the market on their own – totally independent from the company/

    Tell me how you feel about this FIRST – before we talk about what KIND of govt involvement there will be and how it will apply to everyone equally.

  16. Larry, fair question. Traditionally, insurance has been regulated by the states, which certain limits on the federal government’s ability to step in. State regulation tends to require adequate reserves, fair disclosure, reasonable reimbursement; etc. It’s my understanding a number of states required certain levels of coverage and services to be covered, e.g., Viagra and IV fertilization. And you are not allowed to buy insurance across state lines. That’s been one strong criticism of the ACA – it didn’t touch this prohibition. Many people might be willing to given up some coverage mandated in their state of residence for lower premiums.

    Why would some companies still provide health insurance? To attract better employees; to better motivate employees; to retain employees; etc.

    Now answer my questions.

  17. I’m fine with companies offering anything to attract employees – but that’s a separate issue from the govt being involved.

    Now you’re saying that you want the govt involved – why?

    and you say people cannot buy across state lines – why? who is stopping them?

    aren’t you the guy who said he supports state’s rights?

    I’ve given you several references that show how the govt involvement distorts healthcare, the economy, workers opportunity and worse – inequities.

    So I think I have fairly answered your question. If not re-post it and I will.

    but I think you’re not responding with clarity here because you imply that companies should have the right to do something (which I agree) but then you claim it’s the govt that should provide them with that right – as if they don’t already have that right.

    so which is it? do you think the govt should be involved in employer-provided health insurance – or not and if you do – why would you justify a disparate involvement where for some workers they provide certain benefits but for other workers -not? what justifies that inequitable treatment ?

    • The government is involved. Congress strictly limited the federal government’s ability to regulate insurance, largely leaving that to the states. Why, because that’s what Congress decided. Most, if not all, states have decided to regulate insurance and insurance brokers. A broker can sell insurance only in the state where he/she is licensed and only to that state’s residents, based on state law. Why because that what state legislatures decided.

      And yes, companies have often provided better coverage for officers and other key employees than for rank and file, just as they often provide better life insurance, stock options, pay, bonuses, etc. Why, because their is no law saying every employee must be treated the same. Do you think the head of a company needs to be compensated the same as the mail room clerk? If so, why? I believe, at the same time, there are companies that charge employees a fixed percentage for insurance such that top-paid employees pay more. Might that cause a superstar to leave? Maybe, if she/he can get a better deal elsewhere. Maybe not.

      Larry you are dodging my questions. It strikes me you favor a soviet-style health care system where everyone gets the same thing for health care, except for exempting low-income people from being taxed on their subsidies, but don’t want to say it.

  18. TMT – you make these totally false statements guy.

    what in the do da do you call HIPPA in which the Federal Govt overrules all states and requires ALL employer-provided IN EVERY STATE to not deny pre-existing conditions AND force all subscribers to pay the same price regardless of their individual health status?

    Congress has voted the following laws that apply in ALL states: EMTALA, HIPPA, ARISA, Medicare, MedicAid, TRICARE, CHIPS, and more…

    WHO – RESTRICTS selling health insurance across state lines – the Feds or the States?

    and you still avoid the question of how companies treat their employees – separate and apart from Govt .

    they are free to do that or not but employers do not decide who gets tax-free health insurance for ALL of their employees or NONE of them. It’s not their decision.

    is this is your question: ”
    . It strikes me you favor a soviet-style health care system where everyone gets the same thing for health care, except for exempting low-income people from being taxed on their subsidies, but don’t want to say it.”

    totally false and you know it. What I say is that if the govt is going to provide a benefit – it should be provided equally.

    If the govt is going to allow you to deduct interest on a mortgage – they don’t restrict it to some people.

    you’ve got the govt offering tax breaks to one class of people and not others. Why? is your position that if they did that – we’d be a soviet style govt?

    what kind of logic is that guy? Do you think we are a Soviet Style govt because everyone over 65 is offered Medicare – and we’d be less Soviet if we didn’t do it equally?

    • Sorry, Larry, but you’ve missed the McCarran-Ferguson Act. It contains major limitations on the ability of the feds to regulate the business of insurance. https://en.wikipedia.org/wiki/McCarran%E2%80%93Ferguson_Act

      You support eliminating the tax free status of employer-paid health insurance, so premiums so paid would be treated as part of gross income. Do you also support treating monies spent on subsidies to enable other to purchase income or receive Medicaid coverage as gross income?

  19. Well I give you credit – but that law apparently does not apply to things like Employer-provided as clearly HIPPA and other laws apply uniformly in all 50 states.. so it looks like a relic… like old laws on books that no longer are enforced.

    sure enough:

    Since 1945 federal government has greatly
    increased role in health insurance
     Dependents Medical Care Act (1956) (precursor to CHAMPUS/TriCare)
     Welfare and Pension Plan Disclosure Act (1958)
     Federal Employees Health Benefits Act (1959)
     Medicare Act (1965)
     Medicaid (1965)
     Medigap law
     Federal HMO Act (1973)
     Employee Retirement Income Security Act (ERISA) (1974)
     Indian Health Care Improvement Act (1976)
     COBRA (continuation of group coverage following loss of eligibility) (1985)
     Medicare Catastrophic Protection Act (1988) (repealed 1989)
     Americans with Disabilities Act (1990)
     Omnibus Budget Reconciliation Act (OBRA) (1990) (standardization of Medicare supplement policies)
     Health Insurance Portability and Accountability Act (HIPAA) (portability, guaranteed issuance and guaranteed
    renewal/privacy) (1996)
     Newborn and Mothers Health Protection Act (1996)
     State Children’s Health Insurance Program Act (1997)
     Balanced Budget Act (BBA)(1997) (expands Medigap eligibility guarantees)
     Women’s Health and Cancer Right Act (1998)
     Graham-Leach-Bliley Act (1999)
     Medicare Prescription Drug, Improvement, and Modernization Act (2003) (Part D; Medicare Advantage)
     Mental Health Parity Act (2008)
     Medicare Improvements for Patients and Providers Act (MIPPA) (2008)
     Patient Protection and Affordable Coverage Act (2010)

    http://www.crowell.com/documents/Government-Changes-to-the-Rules-of-Competition-McCarran-Ferguson%20Act-Health-Insurance-Exemption-Repeal.pdf

    so how come all these other insurances have not been challenged and repealed?

    what I support has been clear from the beginning.

    what ever the govt does with regard to taxes and protections for health insurance should apply equally to everyone who works and wants health insurance.

    employer-provided for some and not others who also work is wrong but it has screwed up our health care system overall as more and more people get used to the idea of not having insurance and relying on EMTALA to guarantee them ER and Hospital care. Worse – people that get sick and have no insurance, go bankrupt and then go on welfare.

    it’s that inequity that actually motivated ObamaCare.

    Employer-provided insurance was created in a time when people had their entire careers at one company – and included manufacturing and similar.

    the world has changed and now more and more people do not stay at one company and traditional manufacturing is going away.

    as a result we have more and more people who are employed in industries that do not offer employer-provided.

    these people are not on welfare. they are full time workers and yet because the govt assumed originally that most companies would be offering insurance, they failed to see the evolution.

    anyone who works and needs health insurance should get the same tax and protections the gov might offer.

    Some are saying the govt needs to get out of it – and more and more companies are – and others are calling for health insurance to be portable like IRA/401Ks are – that allow people to change jobs without giving up
    their insurance.

    I asked you how you’d have insurance across state lines and you never answered.

    how would you do that ? what state’s insurance rules would trump the other states? If someone from Missouri bought insurance from a company in Kentucky – which state would control?

    If any person in any state could buy insurance in any other state – who would regulate?

  20. Larry, is a Tenth Circuit case from 2015 proof that McCarran-Ferguson is alive and well? WESTERN INSURANCE COMPANY v. A & H INSURANCE, INC, No. 14-4065, slip op. (10th Cir. April 24, 2015) refusing to take federal appellate jurisdiction because the trial court applied so-called reverse McCarran-Ferguson preemption (i.e., state law trumps federal law). A federal appellate court does not have jurisdiction over state law generally. So by applying MF, the federal trial court stripped the appeals court of jurisdiction.

    Now, of course, Congress can specifically pass legislation that states the normal McCarran-Ferguson result does not apply. For example, Congress could pass a law that says a person living in one state can buy health insurance from a company in a second state subject to the other regulations of the second state. Today, you cannot buy any insurance out of state. You can buy from an agency located in another state if it is also licensed in your state, to the best of my knowledge. The federal law that would create a MF exception to allow cross-state sales of insurance would spell out who regulates. The alternative is lawsuits. But I expect the contract for insurance would also contain a choice of law clause that specifies which state’s law applies in the case of a dispute. Most contracts contain these clauses.

    I still remain confused about your position on some issues. One, do you think every company must provide its employees with health insurance? Two, do you think all coverage should be uniform? Three, can a company elect to provide better insurance for its employees than is a part of the ACA? Four, can a company provide better benefits to some of its employees, but not all?

    I think I understand that you believe all employer-taxpayer payment of health insurance premiums or expenses should be taxable income, perhaps, subject to some floor, standard deduction or lower tax rates? Correct?

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