Interesting ObamaTax End Run, Buckeye-style

Methinks we can file this under "Too Good to be True:"

Ohio state reps Young and Thompson have introduced an interesting bill called the "The Health Care Freedom Act" (no word yet on whether the acronym is intentional), which would prohibit any insurer seeking to do business in the Buckeye State from accepting any federal largesse.

Now, why in the Wide Wide World of Sports would a carrier agree to this?

Well, here's the thinking:

"According to the [ObamaTax], employers and individuals must purchase health insurance or they will be subject to tax penalties ... the price for the insurance companies accepting the federal subsidies is the tax penalty for citizens who don�t purchase insurance.  As long as the insurance companies do not accept federal subsidies, consumers will not be subject to penalty taxes."

So far, so good.

Here's the kicker:

"HCFA prohibits health insurance companies operating in Ohio from accepting any funding from the federal government ... If a company chooses to receive federal subsidies, their license would be suspended in the state"

This makes a perverse kind of sense: much like setting up Federally-run Exchanges render a state's citizens from receiving ObamaTax subsidies, prohibiting insurers from accepting federal funds exempts a state's citizens from the ObamaTax mandate. If they went ahead anyway, they'd be barred from writing any new business here (supposedly they could - and would - continue to service existing cases).

But here's why I think this falls under the "Too Good to be True" rubric: first, it's not clear to me that the Ohio Department of Insurance has the authority to rescind a carrier's license pro-actively. Second, what's to stop HHS Secretary Shecantbeserious from issuing a waiver for any carrier that chose to flout this state law? Remember, The ObamaTax trumps the state DOI.

Cato's Michael Cannon (whom we regularly feature and generally admire here at IB) weighs in with his thoughts:

"Since [prohibited carriers] would no longer be licensed and in good standing with the state, they would no longer qualify under the [ObamaTax] as an issuer of �qualified health plans.� ... would therefore preclude them from writing new business or receiving subsidies through any Exchanges for as long as the suspension remained in place."

Again, while I respect Michael's opinion on the matter, I think he's assuming facts not in evidence: to wit, that carriers will actually be held to HCFA standards, and that the Feds would interpret the relevant ObamaTax reg's consistent with what they actually say. Remember, we were told that abortion would *not* be covered under the train-wreck, let alone become a mandated benefit. Why would we presume that this penumbra would be treated differently?

Of course, it may well be a moot point: the bill has yet to pass the Ohio House, let alone  past Governor Kasich.

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