Skip to main content

If I were a betting person, I'd bet most citizens haven't given a minute's thought to the relationship between PPACA (which I'm going to dub "pea paca" for now, as an alliterative alternative to our nemesis, the PNAC crowd, and because "pea packers" are definitely preferable to people packing guns) and the United States Treasury, and yet it is this aspect which, IMHO, accounts for much of the antagonism on the Hill, as well as the "investigation" of the IRS.

Keep in mind that our friendly Cons are always directed by ulterior motives. That is, they never come out and admit what they are actually up to. In part, that's because then, when they don't get what they ostensibly wanted, they're not defeated because, you see, they didn't really want it anyway. If you don't ask for what you really want, then you won't be disappointed when you don't get it. Failure by design is actually a winning strategy. If you don't understand that, that's probably because your personality favors the direct over the round about.

Anyway, harassing the IRS and holding up funding was not about the close inspection of some applications for tax exempt status. It was about hobbling the implementation of "pea paca," which is going to be largely administered by the Internal Revenue Service, a subsidiary department of the United States Treasury.

The Treasury, in addition to putting out newly designed Benjamins, has been issuing some illuminating reports. The first I'd call to your attention is a pdf entitled "Annual Report on the Insurance Industry" by the Federal Insurance Office

Completed pursuant to Title V of the Dodd-Frank Wall Street Reform and Consumer Protection Act
June 2013
Am I the only one that missed that the implementation of the "Pea Paca" was snuck through in Dodd-Frank, after the country had worn itself out on death panels and such? It did not escape my notice that the higher education loan program was taken away from the banks as part of health insurance reform, but I missed that the insurance industry came under new monitoring via Dodd-Frank.
The insurance industry plays a vital role in the economy of the United States. Insurance premiums in the life and health (L/H) and property and casualty (P/C) insurance sectors totaled more than $1.1 trillion in 2012, or approximately 7 percent of gross domestic product.1 In the United States, insurers directly employ approximately 2.3 million people 2, or 1.7 percent of nonfarm payrolls.3 Separately, more than 2.3 million licensed insurance agents and brokers hold more than 6 million licenses.4

U.S.-based insurers are also significant participants in the global financial markets. As of year -end 2012, the L/H and P/C sectors reported $7.3 trillion in total assets –roughly half the size of total assets held by insured depository institutions.5 Of the $7.3 trillion in total assets, $6.8 trillion were invested assets.6

If I remember correctly, then roughly speaking, the insurance industry owns about half as much as the whole country owes on the mis-named "national debt." Which is not to say they are one and the same or that Congress is holding the whole country hostage on behalf of their friends in the insurance industry. The insurance industry owns a lot of other stuff.
Insurers in the United States rank among the largest purchasers of corporate, sovereign, state, and local bonds. Insurer investment portfolios also include short-term commercial paper, asset-backed securities, and other financial instruments. Some U.S. insurers are significant participants in other institutional markets, such as the derivatives and securities lending markets.
Note: While it is possible to copy and paste from the pdf, there are many breaks in the sequence of letters, so lines have to be re-assembled on the page. I won't quote at length.
In Title V of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), Congress established the Federal Insurance Office (FIO) within the U.S. Department of the Treasury.7 In addition to advising the Secretary of the Treasury
(Secretary) on major domestic and prudential international insurance policy issues and serving as a non-voting member on the Financial Stability Oversight Council (Council), FIO is authorized, pursuant to the Dodd-Frank Act, to:


monitor all aspects of the insurance industry, including identifying issues or gaps in the
regulation of insurers that could contribute to a systemic crisis in the insurance industry
or the U.S.financial system;

monitor the extent to which traditionally underserved communities and consumers,
minorities, and low-and moderate-income persons have access to affordable insurance
products;

recommend to the Council that it designate an insurer as an entity subject to regulation as a nonbank financial company supervised by the Board of Governors of the Federal
Reserve System (Federal Reserve);

coordinate federal efforts and develop federal policy on prudential aspects of  international insurance matters, including representing the United States, as appropriate, 6 in the International Association of Insurance Supervisors and assisting the Secretary in negotiating covered agreements;
and

consult with States regarding insurance matters of national importance and prudential
insurance matters of international importance

Insurance companies were obviously a primary funnel of dollars to Wall Street and the cap on non-medical expenditures, if they accept subsidized policy holders, spells the end of their cash cow status. That Dodd-Frank, which was passed by the Congress, even though many members may not have bothered to read the provisions, has created the possibility of subjecting major players to the supervision of the Federal Reserve Board and regulation by the Federal Deposit Insurance Corporation comes as news to me. But it does explain the angst. People were asleep at the switch and now they are in a panic because who's going to buy that Consumer Protection and Patient Protection are bad things?

Oh, and keep in mind that the $7.3 trillion does NOT include health care policies.
So, these new regulations are about the pure gravy, speculative stuff.

At year-end 2012, moreover, reported surplus levels were at record highs for both the L/H and P/C sectors. Both sectors had reported decreases to surplus in 2008 from the then -record surplus levels reported at year - end 2007, which were $267 billion and $529 billion, respectively. Since 2008, both sectors have reported surplus increases each year. For year-end 2012, L/H sector reported surplus was approximately $329 billion and P/C sector reported surplus was approximately $597 billion.
2011 was a tough year because of all the natural disasters. The industry's net income was only $14.4 billion. What I want to know is do they send some of that back to the Treasury as revenue, or do they "invest" with their friends?

Something to look for from the International Association of Insurance Supervisors:

The IAIS continues development of the “Common Framework for the Supervision of
Internationally Active Insurance Groups” (ComFrame) , a framework for the group - wide
supervision of internationally active insurance groups (IAIGs).  In June 2011, the Technical Committee of the IAIS published a ComFrame concept paper for comment. The
next draft of ComFrame will be released for public consultation in October 2013. The draft establishes a range of qualitative and quantitative requirements for IAIGs, and
it sets out the processes and prerequisites for supervisors to implement ComFrame.12
There is also a report from the TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION, tracking the health care implementation fund expenditures by the IRS, which provides some interesting details.

To wit:

The Patient Protection and Affordable Care Act of 2010 and the Health Care and Education Reconciliation Act of 2010 (collectively referred to as the Affordable Care Act (ACA))[1] contain an extensive array of tax law changes that will present many challenges for the Internal Revenue Service (IRS) in the coming years.  The ACA provisions provide incentives and tax breaks to individuals and small businesses to offset health care expenses.  They also impose penalties, administered through the tax code, for individuals and businesses that do not obtain health care coverage for themselves or their employees.

While the Department of Health and Human Services (HHS) will take the lead in developing the policy provisions of the ACA, the IRS will administer the law’s numerous tax provisions.  The IRS estimates that the ACA includes approximately 50 tax provisions, at least eight of which will require the IRS to build new computer applications and business processes that do not exist within the current tax administration system.

Fifty new tax provisions!  No wonder Issa and friends are irate. Also, the laws set up a one billion dollar fund to pay for the transition. So far, the IRS, even though it failed to include indirect costs (the reason for the auditor's negative response), has received $488 million from HHS for the implementation and does not expect to get more. Any additional work has to come out of the ordinary operating budget at the IRS, for which they requested $360 million for fiscal 2013 and that was not received. So, it should not come as a surprise that the Internal Revenue Service, unlike the Park Service, has not come in for a mini-bill in the House. Since everybody, presumably, hates the IRS, not letting them hire new people won't attract much notice in the press.
The IRS’s FY 2014 budget request includes additional funding of $440 million to fund 1,954 FTEs for continued efforts related to the implementation of the ACA.  The largest component of this increase is $306 million for the implementation of the information technology changes needed to deliver tax credits and other requirements.  It therefore continues to remain critical that the IRS develop complete and reliable estimates for all costs associated with the implementation of the ACA and accurately track and report on actual costs devoted to this effort.
See, there is the issue in a capsule. Almost two thousand jobs to send dollars back to the people who paid them in in the first place--without any Congress critter having a say-so on whether they are paid out! Constituent services! I never realized before that meant screwing up the law, so the critters can get credit for "fixing" things for constituents.

There were actually two laws. The "Pea Paca" and the Health Care and Education Reconciliation Act worked in tandem to strip banks of education loan guarantees and insurance companies of their autonomy. Which is why the Cons are now convinced that they can kill the two bills, which they apparently didn't read, with one stone -- shutting off the operating dollars to all departments and forgetting that designated funds aren't covered. Never mind that the ACA train has already left the station. But then, other than Joe Biden, nobody rides trains.

EMAIL TO A FRIEND X
Your Email has been sent.
You must add at least one tag to this diary before publishing it.

Add keywords that describe this diary. Separate multiple keywords with commas.
Tagging tips - Search For Tags - Browse For Tags

?

More Tagging tips:

A tag is a way to search for this diary. If someone is searching for "Barack Obama," is this a diary they'd be trying to find?

Use a person's full name, without any title. Senator Obama may become President Obama, and Michelle Obama might run for office.

If your diary covers an election or elected official, use election tags, which are generally the state abbreviation followed by the office. CA-01 is the first district House seat. CA-Sen covers both senate races. NY-GOV covers the New York governor's race.

Tags do not compound: that is, "education reform" is a completely different tag from "education". A tag like "reform" alone is probably not meaningful.

Consider if one or more of these tags fits your diary: Civil Rights, Community, Congress, Culture, Economy, Education, Elections, Energy, Environment, Health Care, International, Labor, Law, Media, Meta, National Security, Science, Transportation, or White House. If your diary is specific to a state, consider adding the state (California, Texas, etc). Keep in mind, though, that there are many wonderful and important diaries that don't fit in any of these tags. Don't worry if yours doesn't.

You can add a private note to this diary when hotlisting it:
Are you sure you want to remove this diary from your hotlist?
Are you sure you want to remove your recommendation? You can only recommend a diary once, so you will not be able to re-recommend it afterwards.
Rescue this diary, and add a note:
Are you sure you want to remove this diary from Rescue?
Choose where to republish this diary. The diary will be added to the queue for that group. Publish it from the queue to make it appear.

You must be a member of a group to use this feature.

Add a quick update to your diary without changing the diary itself:
Are you sure you want to remove this diary?
(The diary will be removed from the site and returned to your drafts for further editing.)
(The diary will be removed.)
Are you sure you want to save these changes to the published diary?

Comment Preferences

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site