Politics & Policy

The Obamacare Non-Exemption

Congressional employees aren’t receiving a “special handout.”

The Affordable Care Act, a.k.a. Obamacare, has many problematic provisions. Right now one that affects a remarkably small number of Americans — members of Congress and their staff — is attracting a great deal of controversy. It is also causing a great deal of confusion.

The dispute has its origin in the debate over the law in 2010. Republican senator Chuck Grassley suggested an amendment intended to make Democrats balk: Members of Congress and their staff would have to buy their insurance from the health-care exchanges. The amendment explicitly said that the federal government should continue making the same employer contributions. It was not designed to cut employees’ benefits, but rather to make sure they had a stake in the quality and efficiency of the exchanges. Democrats actually accepted it, and put it into the eventually passed bill, but without the provision for employer contributions.#ad#

The law thus treats Congress and its staff substantially differently than all other Americans. Many Americans who now get insurance coverage from their employer may end up having to go on the exchanges; but only congressional employees are actually forced onto them, with the option of an employer plan prohibited by law. In the private sector, some of the savings from ending employer plans can go to higher wages, which employees can use to buy insurance from the exchanges. (Though that contribution will probably be after-tax earnings, rather than the pre-tax premium contributions employers make now.) It’s possible there will be exceptions, but for the most part the market simply won’t allow companies to cut an employee’s compensation by as much as yanking away their entire employer health-care contribution amounts to.

While Trader Joe’s, for instance, is discontinuing its health-insurance plan for part-time employees, the company will be giving each of them $500 a year — which sounds like a pittance, but when it is combined with the subsidies that low-wage employees like these will receive, coverage on the exchanges will actually cost most employees less out-of-pocket than what they got from their employer. There will be no such substitution in congressional offices, because the amendment does not increase the budget for legislative salaries. Some congressional employees would receive tax-credit subsidies on the individual market, like low-wage workers, but most would not.

When you hear about a “congressional exemption” from Obamacare, this refers to the fact that the Office of Personnel Management, part of the executive branch, has chosen to make up for this differential treatment by paying part of congressional employees’ health-care premiums on the new exchanges. They haven’t been “exempted” from the amendment that forces them onto the exchanges, in a way no other American is.

OPM decided to contribute the same amount to these exchanges that the government now spends on congressional employees’ health benefits ($5,000 for individuals, $11,000 for families). This decision was probably illegal, since Congress didn’t authorize funds for the plan, as Cato’s Michael Cannon explains.

Congressmen and their staff, then, are getting a questionable workaround from the law — but it’s from a provision of the law that treated them particularly badly rather than neutrally. The net result of the law and the workaround isn’t a “special handout” for congressional employees.

Senator David Vitter (R., La.) says that Congress should pass an amendment to do away with this supposed “exemption.” The law would actually layer another regulation onto Congress (and executive-branch appointees, too) that doesn’t apply to any other American, by preventing their employer from contributing to their health insurance.

The reason the White House provided its procedurally dodgy solution, which Vitter aims to address, is that passing a fix through Congress would probably be politically difficult. But unless you think every congressional employee’s salary should be cut by between $5,000 and $11,000 (or, alternatively, that they don’t deserve any employer contributions to their health-care coverage), you shouldn’t have a problem with your congressman voting for it. (For one, such a salary cut would make Congress more a place for well-off Americans than it already is.)

Senator Ted Cruz has actually suggested that the former’s amendment should be expanded to every employee of the federal government — from D.C. schoolteachers to much of the active-duty military. (Vitter says he opposes this because it is infeasible politically.)

The defense of the provision remaining as is — ending the federal contributions to Congress’s exchange premiums — relies on the idea that Congress (or literally almost all federal employees, as Cruz suggested) should suffer the worst possible effects of whatever federal law is passed. That’s a much more punitive intent than the original Grassley amendment had.

With the destructive effects of Obamacare looming, this punishment may sound appealing. But do we really approve of the idea in other circumstances? Do we believe that Congress and its staffers should pay the highest marginal tax rates, regardless of income; that every congressman must have served in the military to vote to declare war; that congressional offices have to carry out any and all reporting requirements and regulations they impose on a particular industry; and so on? There are probably better ways to prevent Congress from passing bad laws.

The congressional staffers, D.C. teachers, and other federal employees Senator Cruz hopes to force onto the exchanges probably receive overly generous health-care benefits now. The executive branch’s fix doesn’t reduce them at all (for now); shifting them onto the exchanges might be a good time to move toward a less generous model. But people who happen to be paid by the federal treasury don’t deserve to have the entire value of their existing coverage stripped away, as almost no Americans will experience.

Nearly half the people in Congress have worked, and are still working, against Obamacare. Senator Vitter’s amendment proposes to cut their pay in order to make a point — a point based on a misunderstanding.

— Patrick Brennan is an associate editor at National Review

Patrick BrennanPatrick Brennan is a writer and policy analyst based in Washington, D.C. He was Director of Digital Content for Marco Rubio's presidential campaign, writing op-eds, policy content, and leading the ...

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