Failing ACA

We hear the whaling and gnashing of teeth over what the Republicans are doing about health care insurance. The Democrats, liberal pundits, and liberal media are having a field day. What you do not hear is that Obamacare, Affordable Care Act (ACA) , was on a death spiral from the moment it was passed only by Congressional Democrats some seven years ago. We were told by the then Speaker of the House of Representatives, Nancy Polosi, the bill had to pass before we could “see what was in it!”. What soon became crystal clear was the ACA was on a suicide mission.
From the very beginning, funding for the ACA was “funny money”. The insurance companies were assured not to lose money by the infusion of federal dollars through the back door. Premiums in the front door were not enough. Never were.
The solution: steal money from Fannie Mae and Freddie Mac, the two largest mortgage backers in the United States. Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corporation) had ongoing profits after recovery from the housing crisis around 2006-2008. The federal government had bailed Fannie and Freddie out from collapse with temporary loans of $187.5B in 2008 in the form of senior preferred stock with a 10% dividend designed to repay the US Treasury over a long period of time using that dividend. The “loans” to Fannie and Freddie had nothing to do with funding the ACA.
Both Fannie and Freddie are “Government Sponsored Entities” BUT are private corporations, not government corporations. Stock and bonds issued by both are sold into the private financial markets. Investors purchase these for private portfolios. Stock and bond values depend upon profits. The US Treasury became a temporary prop up much as was done in earlier years for the automobile industry.
But something happened in 2012. The Obama administration concocted a way to confiscate all profits from Fannie and Freddie indefinitely. The plan was to divert billions of dollars to pay essential Obamacare insurance subsidies that Congress had refused to permanently fund. The ACA has two pertinent sections: Sections 1401 and 1402. Section 1401 provided tax credits to make insurance premiums more affordable. This section was as added to a preexisting list of permanently-appropriated tax credits and refunds. Section 1402 reduced deductibles, co-pays, and other means of “cost sharing” by insurers. This section was not permanently appropriated and was to be funded annually by Congress. Remember, Congress is the only government entity that can authorize appropriations and that through the House of Representatives. They never funded Section 1402 (known as the “unfunded mandate”). Congress refused.
President Obama, through the Department of the Treasury and the Department of Health and Human Services, funded the ACA anyway by confiscating profits from Freddie and FNMA who earlier had been placed into a conservatorship in 2008 under the Federal Housing Finance Agency. This allowed taxpayer support for the bail out of Fannie and Freddie.
The problem: what Obama had initiated was un-Constitutional. Obama confiscated Fannie and Freddie profits without Constitutional authority. This was the finding of the United States District Court for the District of Columbia in Civil Action No 14-1967 (RMC). Without the hidden Fannie and Freddie profits in the back door, the ACA would collapse. Obama tried to skirt the Constitution.
He was caught.

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