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With the reelection of President Barack Obama, the implementation of the federal health care law is moving forward, leaving states that have resisted implementation to make some key health care decisions. The U.S. Department of Health and Human Services (HHS) has long encouraged states to implement their own health insurance exchanges, and just this week announced that it would extend the deadlines for states to do so. Rather than requiring formal plans be submitted by November 16, states must simply say “yes” or “no” to state implementation by that date, and have until December 14 to present formal plans. If states choose a federal/state partnership, they have until February 15 of next year. In a recent article in Health Care News, Heartland Research Fellow Benjamin Domenech explained that “One critical outstanding issue is the distribution of subsidies via the exchanges. A key legal argument, now embraced by the state of Oklahoma, is challenging the authority of the IRS in implementing a rule which may go beyond the scope of the law in allowing the federal exchanges to distribute taxpayer subsidies. Resolution of this conflict could prove to be a major difficulty for the administration should the courts find in favor of a literal reading of the law.” Kendall Antekeier, Manager of External Relations and Health Policy Analyst, explains the extension deadlines below in a new Research & Commentary. In it she argues that states may still find avoiding implementation to be the best way to protect state control over health care. She writes, “Secretary Sebelius still will approve a state’s exchange only if ‘all minimum’ federal requirements are met, and ‘an exchange may not establish rules that conflict with or prevent the application of exchange regulations promulgated by HHS.’ Additionally, even for state-crafted exchanges the federal government is awarded oversight over all operations. Therefore … a ‘state’ exchange is really just a state-established federal exchange.” If you have any questions or if you would like to talk with an expert about implementation in your state, feel free to reach out to us at any time. This week’s edition of The Leaflet features research and commentary addressing the new health insurance exchange deadlines, taxing cloud computing, state capital gains taxes, commodity position limits, wind power, and position limits. Respectfully, John Nothdurft
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Lead Story Research & Commentary: Extension Deadlines for Health Insurance Exchanges Now that President Barack Obama has won reelection, the U.S. Department of Health and Human Services has extended the deadlines for states to implement health insurance exchanges. Instead of having formal plans due to HHS by November 16, HHS is requiring states simply to say yes or no to state implementation by that date. Formal implementation plans are now due by December 14 or, if choosing a federal/state partnership, before February 15 of next year. HHS Secretary Kathleen Sebelius says the deadline extensions are an example of continued flexibility from the federal government, and a representation of the flexibility states will have in a state-created health insurance exchange. However, the final exchange rules distributed by HHS and the language in the Patient Protection and Affordable Care Act (PPACA) both say otherwise. Sebelius still will approve a state’s exchange only if “all minimum” federal requirements are met, and “an exchange may not establish rules that conflict with or prevent the application of exchange regulations promulgated by HHS.” Additionally, even for state-crafted exchanges the federal government is awarded oversight over all operations. Therefore, opponents say, state flexibility is limited and a “state” exchange is really just a state-established federal exchange. |
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Research & Commentary: Taxing Cloud Computing This Research & Commentary by Senior Policy Analyst Matthew Glans examines cloud computing and the taxing challenges the new technology creates for state governments. Glans argues that state legislators should avoid placing new, burdensome taxes on cloud computing and abide by the physical presence standard. Otherwise, cloud service providers will be discouraged from setting up shop in-state or providing these services there. Research & Commentary: State Capital Gains Taxes This Research & Commentary examines state capital gains t axes and the reforms being considered by different states. In it Glans argues that states should implement tax policies that encourage capital formation and investment in their economies. While capital gains taxes should be eliminated altogether, the efforts to lower them by several states are a step in the right direction. According to the commentary, “As Congress decides whether to allow the national capital gains tax rate to increase at the beginning of next year, states across the country are debating whether to change their own capital gains taxes. These are taxes paid by individuals and corporations on their capital gains, or profits realized when investors sell a capital asset for a net gain. Currently 43 states charge some form of capital gains tax. These taxes hold down capital formation and reduce wages for workers.” Research & Commentary: Commodities Position Limits Since the 2008 financial crisis, the effect of speculation on commodities pricing has been hotly debated. Although speculation in commodities may play a role in determining prices, price fluctuations are largely a response to the fundamental forces of supply and demand. Nonetheless, in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, “position limits” on the number of options or futures contracts an investor may hold on any one underlying security were placed on all commodity futures, options, and swaps, to curb speculation that some people blamed for the high price volatility of certain commodities, primarily crude oil contracts that affected gasoline prices. This Research & Commentary examines commodities position limits and their possible effects on financial markets and the economy. In it Glans argues that “in sum, position limits add an unnecessary layer of regulation on financial markets that ends up hurting the economy further.” This Research & Commentary by Policy Analyst Taylor Smith explains how wind power is by far the most preferentially treated industry in the energy sector. After 35 years of subsidies, credits, and mandates, wind power generation produces a mere 2.9 percent of the United States’ total electricity. According to the commentary, “The physical limitations of wind power, not the lack of subsidies, are what make it uncompetitive with other energy sources. The production tax credit and other wind power subsidies are a bad deal for taxpayers. Government should instead look to eliminate all energy subsidies rather than increasing them for any particular energy type.”
Op-ed: Perhaps the Influence of Teacher Unions is Waning Teacher unions are falling further into debt, and taking their entire states’ finances with them, says Heartland Research Fellow Joy Pullmann in an editorial for the Pittsburgh Tribune-Review, and it all begins with teacher unions’ bloated benefits. Pullmann says, “The financial weakness of powerful state teachers unions suggests their power over state politics might be receding. The financial and educational disasters they have created indicate their retreat can’t come fast enough.”
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John Nothdurft joined the staff of The Heartland Institute in May 2008 and left in January of 2019.
