More States Challenge Legality of Health Care Law

It seems the controversial federal health care law is not going through without serious rebuttal from what is now over 50% of America’s states. A state press release has more on the ongoing lawsuit and Indiana’s role:

Today six additional states sought to join the group of 20 plaintiff states — including Indiana – that have brought a legal challenge to the new federal health care law. Attorney General Greg Zoeller, who joined the lawsuit on behalf of Indiana in May, issued this statement:

“Now that the number of plaintiff states has expanded from 20 to 26, it underscores that this lawsuit is widely understood to have merit. After the health care law was ruled unconstitutional in a separate lawsuit in Virginia that raised many of the same arguments, no one now can claim that this legal challenge is a frivolous lawsuit,” Zoeller said.

“Regardless of the eventual ruling by the federal court in our case, it is important that the states have an opportunity as sovereign entities to challenge the constitutionality of the federal government’s claims of authority. Under our federalist system, this respectful legal challenge is a proper check on the role of the federal government,” Zoeller added.

“We and the other plaintiff states contend the federal mandate that individuals purchase a private health insurance product or face a penalty is unconstitutional, and that ultimately this question should be decided by the United States Supreme Court. Having met with Hoosiers across our state, I agree that some type of health insurance reform is needed in this country, but implementing it ought to be done in a constitutional manner,” Zoeller said.

In addition to Indiana, the group of 20 plaintiff states bringing the legal challenge included Florida, South Carolina, Nebraska, Texas, Utah, Louisiana, Alabama, Colorado, Michigan, Pennsylvania, Washington, Idaho, South Dakota, Mississippi, Nevada, Arizona, Georgia, Alaska and North Dakota. Also joining as plaintiffs were two private individuals and the National Federation of Independent Business (NFIB).

Today, the plaintiffs filed a motion with the court to amend the complaint so that six more states can join the case: Ohio, Kansas, Wyoming, Wisconsin, Maine and Iowa, bringing the total plaintiff states to 26. The U.S. Department of Justice represents the federal government defendants.

Medicaid Still a Puzzler for State Governments

While health care reform and its unknown costs have been popular topics, states have also specifically focused on Medicaid. Texas is among several states that have at least explored dropping out of the federal program. The consequences would be severe and there is no good choice, experts say. Stateline reports:

Arizona has generated national attention in recent weeks for its decision to stop paying for life-saving organ transplants under the state’s Medicaid program. The decision — made in the face of a severe fiscal crisis — has been portrayed as one of the recession’s sharpest state budget cuts.

In Texas, however, some Republican lawmakers — and Governor Rick Perry — have talked not only about dropping certain procedures and benefits under Medicaid, but about dropping out of the program altogether. They say the state can no longer afford the 45-year-old, state-federal health insurance program for the poor.

On Friday (December 3), a long-awaited state study quantified what such a decision would mean for Texas.

The study, by the Texas Department of Insurance and the state’s Health and Human Services Commission, found that as many as 2.6 million residents would lose their health insurance if Medicaid were abandoned. Many of those losing coverage would be pregnant women and babies, as the Austin American-Statesman noted. Texas would also lose $15 billion a year in federal assistance, or about a tenth of the state’s entire health care sector.

Keeping Medicaid without reforming it, however, is also not a viable option, according to the study. Rigid federal rules and a dramatic expansion of the program under the new federal health care law leave it on an unsustainable path in Texas — a "no-win dilemma."

"We have to reform the program to save it," Stephanie Goodman, a spokeswoman for the Texas Health and Human Services Commission, told The Dallas Morning News, which noted that Nevada and Wyoming are among other states that have studied dropping out of Medicaid.

Indiana’s Business Tax Climate: Not a Perfect One, But a Good 10

We’re No. 10! We’re No. 10! Not exactly the rallying cry one is used to hearing, but a refrain that deserves more plaudits than usual. Here’s why Indiana’s ranking in the Tax Foundation’s 2011 State Business Tax Climate Index is noteworthy:

  • It’s not easy to make substantial improvements in this area. Indiana has ranged between No.12 and No. 14 over the last five years
  • The top eight seemingly head the list by default as they do not impose one of the big three taxes (sales, income or corporate income). So, without too much of a stretch, you could say Indiana is second on the list
  • We’re far away from the bottom 10; in order from No. 50, that’s New York, California, New Jersey, Connecticut, Ohio, Iowa, Maryland, Minnesota, Rhode Island and North Carolina

The Indiana Chamber’s advocacy efforts certainly are contributing factors to the state ranking. Historic tax restructuring in 2002 (including elimination of the inventory and corporate gross receipts levies) is among the Decade of Policy Victories document reflecting major legislative accomplishments from 2000-2009. The Chamber has also achieved success in general property tax reductions and an expansion of a variety of tax credits (good for business, but not earning high marks in this report).

According to the Tax Foundation, the worst tax codes tend to have:

  • Complex, multi-rate corporate and individual income taxes with above-average tax rates
  • Above-average sales tax rates that don’t exempt business-to-business purchases
  • Complex, high-rate unemployment tax systems
  • High property tax collections as a percentage of personal income

Indiana’s rankings in the five categories are: corporate tax index, 21st; individual income tax index, 11th; sales tax index, 20th; unemployment insurance tax index, 12th; and property index, 4th.

Since this tax analysis game is not for the faint of heart, a little more from the Tax Foundation on how it all works.

The methodology of the State Business Tax Climate Index is centered on the idea of economic neutrality. If a state’s tax system maintains a “level playing field” for businesses, the index considers it neutral and ranks it highly. However, each state’s final score depends on a comparison with the other 49 states.

The overall index is composed of five specific indexes devoted to major features of a state’s tax system. Each of these five indexes is composed of several sub-indexes.

Each state’s laws and tax collections were assessed as of July 1, 2010, the first day of the 2011 fiscal year. Newer tax changes are the subject of commentary in an appendix but are not tallied in the scores and rankings.

The Tax Foundation has data charts, further analysis and a full 60-page report. By the way, you have to go west for most of the rest of the top 10 (in order): South Dakota, Alaska, Wyoming, Nevada, Florida, Montana, New Hampshire, Delaware and Utah.

And finally, going into a state budget year that will bring pressure to raise revenues, let’s all keep the vital importance of the tax climate in mind on business attraction and expansion decisions.

Coal Making Comeback for Some Businesses

America’s new likely Energy Secretary, nominee Steven Chu, is on record saying coal is his "worst nightmare." Well, he obviously hasn’t been locked in solitary with a stereo looping that migraine-inducing terror of a song, "Bad Day." That is my worst nightmare, and I’d contend it’s far worse than anything coal will ever provide.

But Chu’s (and Obama’s) aversion to coal is hardly music to the ears of the nation’s coal producers, namely the top five producing states (Wyoming, West Virginia, Kentucky, Pennsylvania and Texas). This is likely why the Small Business & Entrepreneurship Council has a different take on coal:

For good measure, coal is affordable. On December 27, the New York Times ran a fascinating story titled "Burning Coal at Home Is Making a Comeback". While still a tiny fraction of the market, the story explained how the number of homes using coal as a heating fuel has risen. Coal consumption as a heating fuel, it was reported, hit a low in 2006, then rose by 7 percent in 2007 and more than 10 percent during the first eight months of 2008.

Opportunities have expanded for some small businesses. For example: "Dean Lehman, the plant manager for Hitzer Inc., a family-owned business in Berne, Ind., that makes smaller, indoor coal stoves, said his stoves were on back order until March. And Jeffery Gliem, the director of operations at the Reading Stove Company and its parent, Reading Anthracite, in Pottsville, Pa., which supplies coal and stoves to 15 states in the Northeast and Midwest, said the uptick in interest was the largest he had seen in 30 years. ‘In your typical year you might have five, six, seven thousand stoves being sold,’ Mr. Gliem said. ‘This year it was probably double that.’"

To get an idea on the cost differential, consider the following: "Coals vary in quality, but on average, a ton of coal contains about as much potential heat as 146 gallons of heating oil or 20,000 cubic feet of natural gas, according to the Energy Information Administration. A ton of anthracite, a particularly high grade of coal, can cost as little as $120 near mines in Pennsylvania. The equivalent amount of heating oil would cost roughly $380, based on the most recent prices in the state – and over $470 using prices from December 2007. An equivalent amount of natural gas would cost about $480 at current prices." 

UPDATE: The Heritage Foundation just released this series of questions for Chu, as well.

U.S. Senate Seats Can Provide More Drama than “Laguna Beach”

A new article on Stateline proves that Blagojevich’s Senatorial dealings are far from the first drama to surround a vacant U.S. Senate seat. Granted, I doubt any of these governors were caught on tape dropping F bombs of glee over the opportunity to personally benefit over the appointments, but interesting nonetheless:

In Alaska in 2002, newly elected Gov. Frank Murkowski (R) appointed his daughter, Lisa, to the Senate seat he himself had vacated. The move caused such an uproar that both the Legislature and later voters — through a ballot measure approved in 2004 — took away the governor’s appointment power. Alaska now holds elections to choose substitute senators, and Murkowski later was voted out of office in a Republican primary, losing to current Gov. Sarah Palin. 

In Massachusetts in 2004, Democratic lawmakers — worried then-Gov. Mitt Romney would appoint a fellow Republican to Democratic Sen. John Kerry’s seat if Kerry won the presidential election — stripped Romney of his power to do so. Voting on the proposal — which replaced the appointment process with a special election — broke sharply along partisan lines.

Also noteworthy is that current Wyoming Gov. Dave Freudenthal — a Democrat — was the last governor to fill a vacant Senate seat with someone from the opposing party. This happened last year when Republican Senator Craig Thomas passed away, and Wyoming’s law dictated that the seat be filled by someone from the same party as the person who vacated it. Freudenthal chose Republican John Barasso.