The Corner

How (And Why) Cronyism Works

Wherever you ultimately come down on the massive omnibus budget bill Congress is considering this week (the text of which was just released last night), it is certainly full of lessons about how Congress works. One of the best examples comes near the very end. All the way on page 1602, in the next-to-last substantive provision of the entire bill, we have this beautiful passage:

SEC. 102. MODIFICATION OF TREATMENT OF CERTAIN HEALTH ORGANIZATIONS.

(a) IN GENERAL.—Paragraph (5) of section 833(c) of the Internal Revenue Code of 1986 is amended—

   (1) by striking ‘‘this section’’ and inserting ‘‘paragraphs (2) and (3) of subsection (a)’’, and (2) by inserting ‘‘and for activities that improve health care quality’’ after ‘‘clinical services’’.

(b) EFFECTIVE DATE.—The amendments made by this section shall apply to taxable years beginning after 11 December 31, 2009.

Clear as a bell, right? Well it’s exactly as clear as it was intended to be. This section is, simply put, a special favor for Blue Cross/Blue Shield allowing them to count “quality improvement” spending as part of the medical loss ratio calculation required of them under Obamacare. And it’s made retroactive for four years, saving them loads of money. (You can find some background here.)

Now maybe this is a substantive improvement over existing law, or maybe it isn’t. But it’s special relief from an Obamacare requirement that’s basically being given to one insurer, is stuffed into the very end of 1,600 pages of similarly clear and accessible language, and is written as a series of removals and insertions of words from another statute with no explanatory text of any kind.

This is why cronyism wins.

Yuval Levin is the director of social, cultural, and constitutional studies at the American Enterprise Institute and the editor of National Affairs.

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