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#FullRepeal Daily Digest

The Wall Street Journal: What’s ‘Success’ in Lowering Health-Care Premiums

  • During the 2008 presidential campaign, Barack Obama repeatedly promised that his health care plan would “cut costs” and “lower premiums” by $2,500 per year for the average family. Now that Obamacare is coming into effect, supporters have shifted their talking points: the law will lower premium increases relative to what they  have been without the law—a tougher metric to quantify and a more difficult measure of success to sell politically.
  • Recently the Commonwealth Fund, a think tank that supports the law, released a paper on overall premium levels.
  • The analysis by Jonathan Gruber, a paid consultant to the Obama administration on the Affordable Care Act, argues that premium increases routinely exceeded 10% before the law was enacted in 2010 and that Obamacare will help lower the scope of increases in future years.
  • Ironically, the foundation for Mr. Obama’s promises rests in a memo released by three consultants to the 2008 campaign—one of whom, David Blumenthal, now heads the Commonwealth Fund.
  • Since the law was enacted, Commonwealth and other supporters, while saying that Obamacare would mitigate premium increases, have largely failed to address the earlier promise that the law would reduce them outright.
  • Another author of the 2008 memo, David Cutler, said in 2012 that, in retrospect, Mr. Obama made “occasional misstatements” when pledging that premiums would fall by $2,500 annually.
  • In August 2012, PolitiFact rated that premiums pledge a “promise broken.”

Washington Examiner / National Center for Policy Analysis: Obamacare Will Make 2015 IRS Filings 'Most Chaotic in Years,'

  • The complexities of Obamacare's  subsidies, fines and the implementation of previously delayed mandates will make the 2015 tax season chaotic.
  • According to Ryan Ellis, a national tax expert, "[T]he upcoming tax filing season has the potential to be the most chaotic in years." Ellis told the House Ways and Means subcommittees on Health and Oversight that low-income Americans could end up paying $500 in unexpected taxes.
  • When low- and middle-income Americans go to purchase insurance in the Obamacare exchanges, the subsidies that they receive are based on their estimated income for that year. Based on that estimate, the government sends a credit to the enrollee's insurance company. But what if the government estimates incorrectly?
  • Example:
    • If the government projects that an enrollee will earn $30,000 in 2014, it will send that enrollee a subsidy of $2,000.
    • However, if the enrollee actually earns $40,000 in 2014, he is only eligible for a subsidy of $1,500.
    • At that point, based on income factors, the enrollee will owe the federal government some or all of the $500 difference.
  • Even though the government made the original miscalcluclation, the taxpayer will still be responsible for paying the correct amount to the IRS.

Associated Press: Medtronic to buy Irish medical-device maker Covidien

  • U.S. medical device manufacturer Medtronic (makes pacemakers and insulin pumps, among other products) announced Sunday night that it has will buy Ireland-based competitor Covidien (makes surgical equipment) for $42.9 billion in cash and stock.
  • The deal is the latest in a series of acquisitions by medical-device manufacturers. The companies are seeking to expand their offerings and contain costs in response to price curbs forced by the nation's new healthcare law.
  • The combined company would have its executive offices in Dublin, where it could benefit from Ireland's lower corporate tax rates. But the merged company would continue to operate in Minneapolis, where Medtronic employs more than 8,000, the companies said in a statement.
  • Medtronic is paying a 29% premium on Covidien's stock price as of Friday.
  • As a result of savings from the deal, Medtronic said it would spend an additional $10 billion over the next decade in investments, acquisitions and research and development in the U.S.
  • "The medical technology industry is critical to the U.S. economy, and we will continue to invest and innovate and create well-paying jobs," Omar Ishrak, Medtronic's CEO, said in a statement.
  • Efforts by domestic companies to use mergers to reincorporate overseas for tax reasons have raised concern among some U.S. lawmakers. Ireland taxes corporate income at 12.5%, compared with a top marginal rate of 39.6% in the U.S., according to the tax advisory firm KPMG.
  • Drugmaker Pfizer recently tried unsuccessfully to acquire U.K.-based AstraZeneca. The banana-seller Chiquita agreed to buy an Irish firm, Fyffes, in March.
  •  Sen. Carl Levin (D-Mich.), and 13 other senators introduced a bill in May to restrict the deals. [Related: House Democrats Introduce Legislation to Tighten Restrictions on Corporate Tax Inversions
  • "These transactions are about tax avoidance, plain and simple," Levin said in a statement. "." Our legislation would clamp down on this loophole to prevent corporations from shifting their tax burden onto their competitors and average Americans

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