Previewing Day Three Of Health Care Reform Oral Arguments

Posted on by Patrick Ishmael

We have reached the last day of oral arguments for the Patient Protection and Affordable Care Act (PPACA), a.k.a., Obamacare. Two issues remain before the U.S. Supreme Court.

First, is PPACA severable — that is, if one part of the law is unconstitutional, may the rest of the law remain, or must the entire law be thrown out? Readers can find extended coverage on the severability issue here.

Second, is PPACA’s Medicaid expansion constitutionally permissible? Congress’ broadening of Medicaid’s eligibility rules affects not only the federal budget but the budgets of the states, which, along with the federal government, fund state-managed Medicaid programs. By expanding the pool of who can receive Medicaid, Congress is raising the states’ costs; the states’ contributions to the program would have to increase to pay for the greater number of beneficiaries. That is bad news for already tight state budgets. Medicaid is a “voluntary” program technically, but practically, states have come to rely heavily on the federal dollars associated with the program. Foregoing PPACA’s Medicaid expansion provisions also probably means foregoing those federal dollars.

Therein lies the issue: Do PPACA’s revisions to Medicaid, which expand the program’s eligibility requirements, constitute permissible federal pressure on the states stemming from Congress’ spending power, or does it go beyond “pressure,” constituting “compulsion” in violation of the 10th Amendment? For those following the arguments at home, listen for whether and how the justices use the word “compulsion” during the hearing. If the Court believes the changes to the law are “compulsion,” it may be inclined to say the Medicaid expansion goes too far, violating the 10th Amendment.

The Court is expected to rule on this week’s oral arguments in June or July.

The Battle Lines Have Been Drawn

Posted on by Michael Rathbone

In January, Missouri Gov. Jay Nixon (D) launched his opening salvo in what was sure to be a contentious session between the governor and the General Assembly regarding the fiscal year 2013 budget. Last week, the Missouri House passed its version of the fiscal year 2013 budget. Both budgets reflect differing priorities and seemingly difficult choices.

If both the governor’s and legislature’s actions indicate anything, there is seemingly nothing else to cut in the budget and thus the state is faced with the Scylla of higher education cuts and the corresponding tuition increases they entail, or the Charybdis of cutting health programs, specifically a program for the blind who do not qualify for Medicaid. However, despite proposed cuts in these programs, there are still egregious examples of programs that clearly have no business being funded but still receive taxpayer dollars.

I have previously blogged about programs such as the Missouri Wine & Grape Board and Missouri ethanol subsidies. According to the House Budget, the Missouri Wine & Grape board receives an appropriation of $1,826,275 while the state will appropriate $9,850,000 to various ethanol and biodiesel programs. Before fighting about whether to cut higher education or programs for the blind, shouldn’t state officials eliminate funding for programs like the two mentioned above?

Previewing Day Two Of Health Care Reform Oral Arguments

Posted on by Patrick Ishmael

Tomorrow, the United States Supreme Court continues hearing arguments regarding the Patient Protection and Affordable Care Act (PPACA), a.k.a., Obamacare. This time, the Court will consider the arguments related to the “main event” of the hearings: the constitutionality of the law’s individual mandate. The individual mandate requires every American, with a few exceptions, to purchase a government-approved health insurance plan, or be forced to pay a fine.

Modern jurisprudence has increasingly allowed the federal government to regulate commerce that is not of an obviously interstate nature. The issue here is that PPACA goes further and regulates the non-purchase of a good or service. Rather than simply regulating the manner in which the health insurance market will operate, PPACA requires that everyone in the country buy something, or be fined. Under this paradigm, market participation would no longer be required for regulation under the Commerce Clause; instead, and in a very real way, the feds would subject you to a purchase requirement merely for being a living, breathing American.

That is a problem. Having a health insurance plan makes sense, but compelling Americans to buy a health insurance plan through heavy-handed federal coercion is awful policy and arguably unconstitutional. Reading into the U.S. Constitution a federal right to demand purchases from its citizens would eviscerate many of the limits on government power enshrined in that document.

If the federal government can require individuals to purchase health insurance, what can’t the federal government require us to purchase? Ilya Somin, a law professor at George Mason University who has filed a brief with the court, contends that if PPACA passes constitutional muster, then Congress could pass “a broccoli mandate, a car-purchase mandate, really any other mandate that you’d want.” Where is the line against such coercion drawn if not by the plain meaning of the Constitution?

Proponents of PPACA have dismissed the suggestion that the federal government would impose a “broccoli mandate,” arguing that the federal government would never try to expand a mandate to purchase goods and services into such areas. But Americans should not have to entrust their freedoms to the word of politicians and bureaucrats, well-meaning or not.

There is no “just trust us” clause in the Constitution. The Constitution is the check that keeps capricious leaders from doing capricious things, and should remain so.

The Main Street Trolley: A Slow Motion Train Wreck

Posted on by Patrick Ishmael

If City Hall has its way, Kansas City will have a $100 million streetcar on Main Street in the not-too-distant future, but fiscal discipline and good sense should bring the project to a full stop.

Earlier this month, the Kansas City Council unanimously approved legislation that would establish a special trolley zone following a proposed streetcar route along Main. New sales and property taxes in the new district would fund the majority of the trolley project. People living in the district will likely vote on those proposed taxes, but residents will not necessarily be the ones bearing the brunt of that tax burden, at least not directly.

Rather, businesses and property owners, many of whom who do not live in the area where their businesses are located, would pay the price. Crown Center Redevelopment President Bill Lucas, whose property sits at the southern-most edge of the proposed line, cautioned that if built as planned, the streetcar’s tax proposal would raise hotel taxes in the district to the second-highest rate in the country. The Kansas City Star’s Yael Abouhalkah noted just last week that Kansas City’s tax burden and debt servicing obligations are among the worst in the region. Is a Main Street train worth digging those holes deeper?

Moreover, if hotel taxes spike, as Lucas suggests, it would be an ironic, albeit not altogether unexpected, twist for a political class captivated by serial centralized development plans. Early last year, city officials pushed the idea of building a new convention center hotel to help link the languishing Bartle Hall to the languishing Power & Light District, thereby driving up consumer traffic for the trio. At the time, I called the proposal Kansas City’s “Hotel California” – an unnecessary fiscal boondoggle that, if built, taxpayers would not soon escape. Why would the city pursue a trolley project funded with a tax that could make the city’s hotel project even less competitive, not to mention hurt the hotels that already serve the downtown area?

But even if the trolley project is taken only on its own merits, the prospects and track record for a streetcar in Kansas City are decidedly poor. Last month, we found out that another city-subsidized entertainment-oriented transit line – the KC Strip – which serves many of the same areas that the trolley would serve, fell behind on its loan payments due to lack of ridership.

Appropriately, the Strip’s buses are painted like trolleys.

A $100 million plan that local businesses do not want to pay for? A $100 million plan that would spike hotel taxes and could undermine a proposed city-backed hotel building project meant to link an underused city-owned convention center to an underused city-subsidized entertainment complex? A $100 million plan that in large part replicates a cheaper transit option, that the city subsidizes, which is already failing?

What could possibly go wrong?

When the people who presumably stand to benefit from the trolley do not want to pay for it, no one should be paying for it. Not only is the city out of sync with the people who would be paying the proposed taxes; it is out of sync with even its own projects and development objectives.

The trolley is just the latest big idea in a long line of irresponsible municipal projects that city officials have proposed, and it may end up being the last straw for a go-go city-directed development culture that has hemorrhaged taxpayer money for years. Stop the train. We want to get off.


Patrick Ishmael is a policy analyst at the Show-Me Institute, which promotes market solutions for Missouri public policy.

Previewing Day One Of Health Care Reform Oral Arguments

Posted on by Patrick Ishmael

Beginning on Monday, the U.S. Supreme Court will hear oral arguments on the Patient Protection and Affordable Care Act (PPACA,) also known as “ObamaCare.” In all, six hours over three days have been allotted for the parties to make their cases for and against the law. A marathon hearing schedule like this is not unprecedented, but it is not typical, either.

Each day will focus on a different aspect of the law being challenged. The order of oral arguments, according to the Washington Post, is as follows:

  • Monday: The Anti-Injunction Act (AIA)

  • Tuesday: The individual mandate

  • Wednesday: Severability, Medicaid expansion

The first session will deal with whether the penalty for not obtaining health insurance is a tax. Under the Anti-Injunction Act, the government typically must levy a tax before it can be challenged. If the Court finds that the PPACA penalty is in fact a tax, the earliest anyone could challenge it would be after it is imposed, which would be 2015 — the year after the mandate goes into effect. Such a ruling might frustrate PPACA supporters and opponents alike, as the law would remain in limbo for several more years, or until Congress changes the law.

Both the government and the states now agree that the penalty is not a tax, and although it is not especially likely that the Court will conclude that the AIA would prevent the Court from reviewing the law at this time, it still could happen. Moreover, the AIA issue, despite its questionable merits, does have a certain appeal. If the Court wants to avoid a highly-charged election-year ruling, this issue would provide a handy escape hatch for the Court.

Oops! Sorry About Demolishing Your Property

Posted on by Audrey Spalding

Albert Munoz, who works as a mechanic and a construction worker, bought a 2-story building in Kansas City, Kan., in the hopes of rehabbing the property. According to Fox 4 Kansas City, Munoz invested more than $400,000 in the building in the hopes of turning the upstairs into apartments and the downstairs into space for his business.

However, in February 2011, Wyandotte County and a wrecking company destroyed the property. Munoz is suing for damages.

The story seems like a shocking outlier. But, just months ago, there was a similar demolition east across the state line, in Missouri.

Show-Me Daily readers may already be familiar with the Jackson County Land Trust, the government entity that deals with vacant land in Kansas City. State legislators have criticized the Land Trust for not selling much property. But, in at least one case, the Land Trust sold a property to a buyer, only to have to deal with the consequences when Kansas City accidentally demolished the property.

During its January 2012 meeting, the Land Trust noted that:

. . . an elderly non-English speaking gentleman purchased 3914 E. 46th Street from Land Trust. Unbeknownst to the buyer, about 30 days subsequent to his purchase, the city demolished the structure on the property. . . . the buyer is interested in 3227 Garfield as a potential alternative and that the buyer may be approaching Land Trust for resolution.

Sadly, when local government gets enthusiastic about demolishing properties in an attempt to mitigate “blight,” property owners can lose their homes. An example in Montgomery, Ala., provides another cautionary tale. There, homes were bulldozed for ordinance violations. To add insult to injury, property owners were then billed for the cost of the demolition.

Is it too much to ask for local government to do a little more due diligence before knocking down someone’s property?

Does Missouri Really Need Another Tax Credit Program?

Posted on by Bruce Stahl

Missouri is one step closer to having another tax credit program, the angel investment incentive tax credit. This tax credit program has some rather concerning features. For instance, certain industries are automatically excluded from consideration (business consultants and insurance companies, to name two). And for those businesses not excluded from the tax credit, the government must still find that they have “a reasonable chance of success.” Since when is the government good at determining what will be successful?

But wait, there is more. This tax credit has the potential for $6 million in new tax credits each year, which means that Missouri revenue could fall by as much. An amount of $6 million might sound insignificant, but this year, Missouri’s 60-plus tax credit programs are expected to dig an $835 million hole in state revenue. That $6 million figure is just less than half the average redemptions per tax credit program. Combined, these programs add up. Could this tax credit be the proverbial straw that breaks the Missouri budget?

Props To Sen. Crowell For Speaking Out Against Budget Gimmicks

Posted on by Audrey Spalding

Today, the Missouri House of Representatives approved a $24 billion state budget. What remains to be seen is whether that budget will pass the Senate.

Sen. Jason Crowell (R-Dist. 27) made waves when he spoke out on Wednesday against gimmicks that legislators are using to avoid tough budgetary decisions. The Columbia Missourian reports that Crowell blocked a vote that would extend the amount of time the legislature has to replenish the state’s “rainy day fund.”

Crowell also argued that the proposed state budget counts on uncertain sources of revenue ($70 million that is estimated to be received from delinquent taxpayers), and one-time sources of funding (a $40 million settlement that the state has not yet received).

In a very passionate speech, Crowell stressed the need for tax credit reform, something he has called for repeatedly. Crowell has sponsored several bills to subject tax credits to the appropriations process. Tax credits currently are not subject to appropriations, meaning that tax credit money (which has consistently been more than $500 million in recent years), comes straight out of state coffers, without consideration of whether the state can afford the expense.

During the hearing, Crowell asked Sen. Kurt Schaefer (R-Dist. 19), the budget chairman,  “When are you going to pick Mizzou over Jeff Smith? That’s what this is all about, Senator.”

Crowell was referring to a developer who the St. Louis Post-Dispatch editorial board has called out for benefiting greatly from the state’s Low Income Housing Tax Credit, and alluding to the cuts that have been made to state higher education. These are the kinds of trade-offs that could be considered if tax credits were subject to appropriations; instead, legislators continue to passively give priority to tax credits.

Indeed, St. Louis Public Radio reports that Crowell promised to filibuster uses of one-time funding unless serious overhauls of the tax credit system, prison spending, and state pensions are considered.

Good luck.

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