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Tax Issue Gives Republicans a Health Care Talking Point Tax Issue Gives Republicans a Health Care Talking Point

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Tax Issue Gives Republicans a Health Care Talking Point

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Senate Minority Leader Mitch McConnell of Ky., center, accompanied by Sen. John Cornyn, R-Texas, left, and Sen. John Thune, R-S.D., speaks to reporters outside the Senate, on Capitol Hill in Washington, Tuesday, June 26, 2012, following a political strategy session with other GOP Senate leaders.(AP Photo/J. Scott Applewhite)

Chief Justice John Roberts may have handed Democrats an unexpected and historic victory Thursday when he upheld their health care law, but at least he had the courtesy to give Republicans a talking point to soothe their pain.

Besides vowing to once again vote in the House to repeal the health reform law, Republicans seized on Roberts’ decision that insurance mandate was within Congress’ power, because it is a tax. That, Republicans said, proves President Obama is a deceptive tax-and-spend liberal, as they’ve said all along.

 

Democrats and the Obama administration originally said the insurance mandate was not a tax when they were working to pass the law in Congress. Of course, they changed their tune when they argued in front of the Supreme Court and lower courts, saying the mandate was within Congress’ power as a tax. Although that argument has been in black and white in briefs to courts for several months now, Republicans only started really harping about it Thursday.

“The bill was sold to the American people on a deception,” Senate Minority Leader Mitch McConnell, R-Ky., said in a statement.

“What the Supreme Court did was they completely rewrote the law, which they have a right to do,” Sen. Orrin Hatch, R-Utah, ranking member of the Senate Finance Committee, said in an interview.

 

“A lot of us don’t think there was any justification for [the Supreme Court]to find it a tax when all through the process it was called a penalty, not only by the administration but by everybody up here on Capitol Hill. So for the Court to just ignore all of that…was just extraordinary.”

The problem with that argument? Republican presidential frontrunner Mitt Romney imposed a similar tax on his constituents in the health reform bill he signed into law as governor of Massachusetts.

Hatch dismissed that criticism as a state’s rights issue. But highlighting any tax raised by Romney when he was governor could prove unpalatable to the Republican base.

Senior administration officials dismissed Republican critiques on the mandate as a tax, saying it was nothing new. They said the campaign between President Obama and Romney would focus more broadly on the economy, and who the middle class trusts more with their taxes.

 

The silver lining for Republicans is the Court’s ruling came in the form of Medicaid. The Court surprised just about everyone by saying the federal government cannot force states to agree to the law’s Medicaid expansion by threatening to take away their current Medicaid funding. The Medicaid expansion was expected to cover 17 million of the estimated 30 million people who will get insurance under the law.

The federal government and the states now roughly split the cost of the Medicaid program, which currently covers 60 million people. As of now, most states do not cover low-income adults. The Affordable Care Act aimed to change that. The federal government promised to fully fund an expansion of the Medicaid program to poor, childless adults for the first few years, but then states would have to pick up some of the costs later on. If they did not participate in the expansion, the ACA said that states could lose all of their federal Medicaid money.

But the Supreme Court says Congress cannot force states into such a deal.

That means that the Medicaid expansion to 17 million people under the health care law is optional, said Alan Weil, executive director of the National Academy for State Health Policy.

Whether states will opt out of the Medicaid expansion is now the question. It would be a politically difficult position to choose against the Medicaid expansion, but governors of both red and blue states have grumbled about Medicaid costs since the health care law passed in 2010, and the economic slowdown has squeezed state budgets. Medicaid made up nearly a quarter of state spending in fiscal 2010, according to the National Association of State Budget Officers.

But, going a little off-message, Hatch said he expected every state to sign up for the Medicaid funding. “There’s no state in its right mind that wouldn’t take the money,” Hatch said. The federal government picks up 100 percent of the expansion cost for the first few years.

If states do opt out of the Medicaid expansion, it could mean that the cost of the health care law will increase as people who would have gone on Medicaid shift to private insurance and collect federal subsidies. However, senior administration officials said it was unclear whether low-income people in states that choose not to accept the Medicaid expansion would qualify for tax credits on state insurance exchanges.

The Congressional Budget Office said on its blog that a new cost estimate would "probably take some time."

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