CLAIM: Health Insurance Subsidies Not Available In States With Federally Operated Exchanges

McCaughey: “In A Careless Error” Health Care Law “Did Not Provide For Subsidies In Exchanges Set Up By The Federal Government.” On Fox's Your World, Betsy McCaughey, a former New York Lieutenant Governor, claimed a “careless error” in the health care reform law would mean that premium tax credits to help certain uninsured Americans buy coverage would not be available in states with federally operated health insurance exchanges:

McCAUGHEY: This law not only calls for the state insurance exchanges, it calls for insurance exchanges to hand out subsidies to people to buy the mandated, mandatory health plan. So, people who were uninsured and have to buy the health plan, people who were previously covered by their employer and got dumped out of health plans because they cost too much, this mandated plan costs so much, they will have to buy health insurance on the exchange, but where is the subsidy? This law empowers subsidies for state health insurance exchanges but in a careless error did not provide for subsidies in exchanges set up by the federal government. [Fox News, Your World, 11/19/12]

FACT: Subsidies Will Be Available In States With Federal Exchanges

CBPP: "Health Reform Law Makes Clear That Subsidies Will Be Available In States With Federally Operated Exchanges." A July Center on Budget and Policy Priorities report noted that “health reform law makes clear that subsidies will be available in states with federally operated exchanges” and that claims to the contrary rest on a “distorted and incorrect reading” of the Affordable Care Act. From the report:

• Section 1321 of the ACA says that if a state elects not to establish its own exchange or will not be ready to operate its exchange in 2014, “the Secretary shall (directly or through agreement with a not-for-profit entity) establish and operate such Exchange within the State and the Secretary shall take such actions as are necessary to implement such other requirements” (emphasis added).[2]  In other words, the federal government will stand in the shoes of a state that elects not to operate an exchange by establishing and operating the exchange on the state's behalf. [3]
• Section 36B of the Internal Revenue Code, which was added to the Code by section 1401 of the ACA, specifically refers to federal exchanges in requiring all exchanges -- state and federally operated -- to report to the federal government on the amount of advance payments of premium credits that taxpayers receive.  That provision would make absolutely no sense if people purchasing coverage through a federally operated exchange were not eligible for the credits.
• If premium credits were not available in states with federally operated exchanges, residents of such states would not qualify for help buying coverage in the exchange, while residents of states establishing their own exchanges wouldqualify.  This would clearly be inconsistent with the purpose of the health reform law, which is to ensure that all Americans have a path to affordable coverage regardless of where they live.  As Chief Justice Roberts noted in referring to the ACA's Medicaid expansion, the exchanges are “an element of a comprehensive national plan to provide universal health insurance coverage.”[4]
• The Treasury Department has specifically rejected the argument that people buying coverage through a federally operated exchange are not eligible for premium credits.  A court considering this question would almost certainly defer to the Treasury interpretation. [Center on Budget and Policy Priorities, 7/16/12]

Wash. Post's Wonkblog: Experts Agree That Federally Managed Exchanges Will Provide Premium Subsidies. A July 16 post on the Washington Post's Wonkblog quoted experts who refuted the idea that exchanges operated by the federal government will not be able to provide similar subsidies to state-operated exchanges:

“This is a 2,000-page bill that was put together in extraordinarily messy circumstances,” says Yale University's Abbe Gluck, who has studied the issue. “The provisions that establish the exchanges are separated, but critically in the reconciliation bill [cited above]  and in Congress, they always talked about the two exchanges as interchangeable.”

A spokesman for Sen. Baucus agrees. “The clear intention of the health-care law is to provide consumers with tax credits to purchase quality, affordable health coverage through either a state or a federally-facilitated exchange,” says Sean Neary, Senate Finance Committee communications director.

[...]

“Judges are pretty practical people,” says Boston University's Abigail Moncrieff, whose work focuses on  governmental law. “Even if Adler and Cannon have the right technical reading, it's unlikely it would hold the IRS to that kind of technical mistake when there's so much evidence that Congress did not mean for it.” [Washington Post, 7/16/12]

CLAIM: Health Care Reform May Cost Many People Their Jobs

McCaughey: “Many People May Lose Their Jobs Because Of” Health Care Law. On Your World, McCaughey claimed that "[m]any people may lose their jobs because of Obamacare, but lawyers -- it's a full employment program for them." [Fox News, Your World, 11/19/12]

FACT: Studies Say Health Care Reform Will Not Harm Employment

Urban Institute: Affordable Care Act “Will Not Have [A] Noticeable Effect On Net Levels Of Employment.” In a report released on March 21, 2011, examining how the Affordable Care Act “will impact labor costs and the demand for labor,” the Urban Institute concluded:

[T]he ACA will not have [a] noticeable effect on net levels of employment for three reasons -- (1) the net new expenditures are too small relative to the overall size of the economy; (2) the negative effects on jobs of Medicare premium cuts and new taxes will be offset by the expansion of coverage through Medicaid and income related subsidies that will likely increase employment; and (3) the new law will not affect the most firms either because they already provide private insurance that meets federal standards or they are exempt from the new requirements because they employ fewer than 50 workers. [Urban Institute, “How Will the Affordable Care Act Affect Jobs?” 3/21/11]

Urban Institute: “Cost-Containment Provisions In The ACA Will Boost The Economy And Employment Over Time.” In addition, the report pointed out that “cost-containment provisions in the” Affordable Care Act “will boost the economy and employment over time”:

There are many cost-containment measures in the ACA, and other proposals could build on those measures if adopted. Cost containment would have somewhat opposite effects than the effects of coverage expansion. To the extent the cost-containment efforts are successful, they will reduce the growth in health care costs. This will reduce the demand for labor as well as incomes in the health care sector, but it will increase the discretionary income that individuals and families have to spend elsewhere. Thus, if these efforts are successful, there will be additional spending outside the health sector that will increase demand for labor in other sectors.

[...]

Curtailing the growth in health care costs will mean lower costs for businesses and individuals. The CEA [Council of Economic Advisers] has estimated that reducing the growth in health care costs by 1 percentage point per year would result in a 4.0 percent higher GDP by 2030,21 due to a higher national savings rate, more capital formation and higher output. Faster growth in GDP would mean more jobs, lower unemployment, and higher family incomes.

[...]

Cost-containment efforts, if successful, will have somewhat opposite effects, reducing the growth in spending on Medicare and Medicaid, which will reduce the taxes or borrowing the federal government has to undertake. Cost-containment that reduces the federal budget deficit would result in faster economic growth, more employment and higher family incomes. Cost-containment would also free up private dollars to be spent in non-health areas of the economy. [Urban Institute, “How Will the Affordable Care Act Affect Jobs?” 3/21/11]

MIT Economist: The Affordable Care Act Will Result In More Hiring In The Short Term And Likely “Boost The Economy” In The Long Run. MIT economist Jonathan Gruber, who consulted with the Obama administration over the Affordable Care Act, wrote that the ACA will create jobs in the medical profession and lead to an increase in consumer spending, which will “provide short-run stimulation to the economy and more hiring” and may “greatly improve the economy in the long run”:

Forget death panels. Lately critics of the Affordable Care Act have been promoting a different claim--that “Obamacare” is a job-killer. Specifically, they say, it will stifle the economy with regulations and taxes. But the economic literature doesn't support this claim. If anything, it suggests the opposite: The Affordable Care Act will boost the economy.

By now, most people who follow politics know that the law will result in more than 30 million additional Americans getting health insurance. But what few realize is that, by expanding insurance coverage, the law will also increase economic activity. These newly insured individuals will demand more medical care than when they were uninsured. And while it takes many years to train a family physician or nurse practitioner, it doesn't take much time to train the assistants and technicians (and related support staff) who can fill much of this need. In many cases, these are precisely the sort of medium-skill jobs that our economy desperately needs -- and that the health care sector has already been providing, even during the recession.

More immediately, the increase in economic security for American families will also mean an increase in consumer spending. Many uninsured consumers are forced to set aside money in low interest liquid accounts to make sure they have enough to cover unexpected medical costs. With the security provided by health insurance, they can free that money up for consumption that is much more valuable to them. When the federal government expanded Medicaid in the 1990s, my own research has shown, the newly insured significantly increased their spending on consumer goods. More purchases of consumer goods will provide short-run stimulation to the economy and more hiring.

[...]

In sum, we know that the ACA will increase jobs in the medical sector in the short run, above and beyond any partial offsets from new excise taxes on that sector. We know that the ACA will improve the functioning of our labor market in the medium run, by allowing workers to move to the positions in which they are most productive and satisfied. We know that there will be little economic drag from taxes on the wealthy or the small equity payments imposed on employers. And there is a good chance that the ACA will greatly improve the economy in the long run by controlling the rate of health care cost increase. The choice between protecting our most vulnerable citizens and improving our economy is a false one--fully implementing the ACA will make both our citizens and our economy more secure. [The New Republic, 7/9/12] 

McCaughey Has A Long History Of Misinforming On Health Care

• McCaughey Received Media Matters' 2009 “Health Care Misinformer Of The Year.” [Media Matters, 12/16/09]

• McCaughey Falsely Claims Repeal Of Health Care Reform Would Help Deficit. [Media Matters, 5/16/11]

• McCaughey Pushed Bogus Claim That Community Health Centers “Largely” Cater To Unauthorized Immigrants. [Media Matters, 11/15/11]

• McCaughey Pushed Bogus Charge That The Affordable Care Act Will Not Decrease The Deficit. [Media Matters, 8/10/12]