WHY THE US CONSUMER IS ABOUT TO BE CRUSHED: THE OBAMACARE INFLATIONARY DELUGE ARRIVES

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by ZERO HEDGE | MAY 22, 2015

For the past three years, the biggest argument supporters of Obamacare would trot out every single time when faced with opposition to the mandatory tax, would be that despite widespread predictions of soaring prices, US medical care service costs had remained low and even, on occasion, declined (we leave aside the lack of discussion about soaring deductibles which are recurring “one-time” charges incurred whenever anyone does need medical care, and whose weighted impact on overall medical outlays is dramatic).

A big reason for this delayed increase in prices is that many insurers were unable to gauge the full base-effect impact of Obamacare on their P&L: after all, effective implementation of Obamacare had been materially delayed thus preventing an apples to apples comparison of incurred fees versus revenues.

All that changed moments ago when core US inflation finally spiked the most since 2013 driven by a 0.7% monthly surge in medical care service costs: the highest since 2007!

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What’s far worse for the troubled US consumer, this is just the beginning. Because after finally digesting the true cost of Obamacare, any recent insurance prime hikes will seem like a walk in the park compared to what is coming.
According to the WSJ, key insurers in some states are proposing hefty rate boosts for plans sold under the federal health law.

Case in point:

In New Mexico, market leader Health Care Service Corp. is asking for an average jump of 51.6% in premiums for 2016.
In Tennessee, the biggest insurer BlueCross BlueShield of Tennessee, has requested an average 36.3% increase.
In Maryland, market leader CareFirst BlueCross BlueShield wants to raise rates 30.4% across its products.
In Oregon, the largest insurer Moda Health seeks an average boost of around 25%.
All of them cite high medical costs incurred by people newly enrolled under the Affordable Care Act.

The irony is that while the Obama administration “can ask insurers seeking increases of 10% or more to explain themselves, but cannot force them to cut rates. Rates will become final by the fall.”

Why the explosion in costs? Simple: take on look at the IBB or any other biotech index, all of which have exploded in recent years as a result of one key thing: pushing prices of medicines ever higher. Now, finally, these soaring prices which have likewise resulted in soaring stock prices, are about to be funded by everyone else.

Insurers say their proposed rates reflect the revenue they need to pay claims, now that they have had time to analyze their experience with the law’s requirement that they offer the same rates to everyone—regardless of medical history.

Health-cost growth has slowed to historic lows in recent years, a fact consumer groups are expected to bring up during rate-review debates. Insurers say they face significant pent-up demand for health care from the newly enrolled, including for expensive drugs.

“This year, health plans have a full year of claims data to understand the health needs of the [health insurance] exchange population, and these enrollees are generally older and often managing multiple chronic conditions,” said Clare Krusing, a spokeswoman for America’s Health Insurance Plans, an industry group. “Premiums reflect the rising cost of providing care to individuals and families, and the explosion in prescription and specialty drug prices is a significant factor.”

David Axene, a fellow at the Society of Actuaries, said some insurers were trying to catch up with the impact of drugs such as Sovaldi, a pricey pill that is first in a new generation of hepatitis C therapies.
Now Sovaldi has been great news for one group of consumers: those who were long the stock of drug maker Gilead. Alas, now the time has come to pay the piper. And while Sovaldi’s cost at $1,000 per pill and $84,000 for a typical 12-week course of treatment, has been a goldmine for GILD, the piper’s invoice will be massive.

Who pays it? Why everyone dear America. That’s the magic of socialized medicine the Obamcare tax, which means everyone has to chip in for the healthcare of the few. Meanwhile, GILD shareholders are laughing all the way to the bank.

As a result, expect Obamacare premiums, which are about to spike across the board virtually everywhere, to become a key talking point:

Insurance premiums have become a top issue for consumers and politicians as they evaluate how well the law is working. Obama administration officials weathered a storm as some younger, healthier consumers saw their premiums jump when the law rolled out, but were also able to point to modest premiums overall as insurers focused on other ways to keep costs down, such as narrow provider networks.

For 2015 insurance plans, when insurers had only a little information about the health of their new customers, big insurers tended to make increases of less than 10%, while smaller insurers tried offering lower rates to build market share.
Since the insurers have now had a chance to evaluate the impact of Obama’s landmark tax on the top- and bottom-line, they have decided that they will need to charge the mandatorily insured Americans more. Much more. After all, it’s not like Americans have much of a choice to say no to a “mandatory” tax.

BlueCross BlueShield of Tennessee, CareFirst in Maryland and Moda in Oregon all said high medical claims from plans they sold over insurance exchanges spurred their rate-increase requests.

The Tennessee insurer said it lost $141 million from exchange-sold plans, stemming largely from a small number of sick enrollees. “Our filing is planned to allow us to operate on at least a break-even basis for these plans, meaning that the rate would cover only medical services and expenses—with no profit margin for 2016,” said spokeswoman Mary Danielson. The plan’s lowest monthly premium for a midrange, or “silver,” plan for a 40-year-old nonsmoker in Nashville would rise to $287 in 2016 from $220.

* * *

Moda Health said that with more than 100,000 individual members, it had the best data “on the care actually being received by these Oregonians. Our proposed rates reflect that.”

Under Moda’s proposal, a 40-year-old nonsmoker in Salem would pay $296 a month in 2016 for a silver plan, up from $245 a month this year. “It is a balance,” said Oregon Insurance Commissioner Laura Cali of her rate-review process.
But wasn’t the Affordable Care Act supposed to make healthcare prices more, well, a?. Well no, as we have explained time and again, most recently last summer.

But the biggest irony: just as Obamacare was the primary reason for the US Q3 GDP surge to 5%, as we explained last December, fooling many pundits into believing the US economy was finally in a self-sustaining liftoff mode…

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… so this year it will be up to Obamacare to single-handedly pump up core CPI inflation – that biggest missing link from the Fed’s “successful monetary policy” checklist.

As for US consumers? Why, they are about to get the short end of the stick again, as any and all “gas savings” now and in the future, will be once again spent on, you guessed it, health insurance.

The problem with that being that unless oil crashes again, there are no gas-savings to be had. Which means one thing: the only thing crushed yet again will be the US consumer, that 70% component of US GDP.

But don’t worry: when the US economy slows down to a crawl once more, and posts a negative GDP print this time during the summer, there will be a double seasonal adjustment for that.

Skyrocketing Medicaid signups stir Obamacare fights

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Some GOP governors are saying: “I told you so.”

BY RACHANA PRADHAN

Medicaid enrollment under Obamacare is skyrocketing past expectations, giving some GOP governors who oppose the program’s expansion under the health law an “I told you so” moment.

More than 12 million people have signed up for Medicaid under the Affordable Care Act since January 2014, and in some states that embraced that piece of the law, enrollment is hundreds of thousands beyond initial projections. Seven states have seen particularly big surges, with their overruns totaling nearly 1.4 million low-income adults.

The federal government is picking up 100 percent of the expansion costs through 2016, and then will gradually cut back to 90 percent. But some conservatives say the costs that will fall on the states are just too big a burden, and they see vindication in the signup numbers, proof that costs will be more than projected as they have warned all along.

Obamacare originally expanded Medicaid — which traditionally served poor children, pregnant women and the disabled — to all childless low-income adults with incomes up to 138 percent of the federal poverty level (about $16,250 for an individual) across the country. But the Supreme Court made expansion optional in 2012. And 21 states, mostly with GOP governors, have resisted.

“The expansion of Obamacare will cost our state taxpayers $5 billion,” Florida Gov. Rick Scott said in an interview with POLITICO last week, referring to the 10-year cost. “Name the health care program — I think the only one is Medicare Part D — that cost less than what they initially anticipated…Historically, if you look at the numbers, with the growth in Medicare costs, Medicaid costs, it’s always multiples.” A bitter critic of Obamacare, Scott at one point surprisingly backed expansion, but withdrew his support earlier this year. His state legislature is deeply split on Medicaid policy.

In some states that did expand, the take-up has been startling — the result, officials say, of significant pent-up demand for coverage. In Illinois, nearly 541,000 people had signed up as of December, far beyond the 199,000 adults the state had estimated would enroll in 2014. The numbers increased to nearly 634,000 as of April.

In Washington, 535,000 people had signed up as of March — already beating the state’s January 2018 goal. Officials’ projection for March had been just 190,365 newly eligible enrollees.

In Michigan, where the first-year enrollment projection was 323,000 people, sign-ups hit 605,000 before falling back to 582,000 earlier this month. Kentucky signed up nearly 311,000 new adults by the end of its 2014 fiscal year, more than double its initial projection of 148,000. And in February 2014, Minnesota forecast that 147,000 newly eligible adults would enroll by December, but actual enrollment that month was at nearly 194,000.

Supporters of Obamacare say the enrollment surge might lead to some budget bumps down the road, but that the historic decline in the uninsured is a major achievement. In addition, they say the expansion is providing significant health and economic benefits to states that more than offset costs.

States — and hospitals and doctors — are getting billions of dollars from the federal government to cover low-income people, letting them save money on other programs that had been fully or partly funded through state dollars.

“Can we afford not to do this?” asked Audrey Haynes, secretary of Kentucky’s Cabinet for Health and Family Services under Democratic Gov. Steve Beshear. Kentucky under Beshear has fully implemented Obamacare, and it’s seen the second largest decline in its uninsured rate, after Arkansas.

But the money remains a concern not just for foes of expansion like Scott, but for GOP governors like Utah’s Gary Herbert who are trying to come up with some way for their states to expand. Herbert met with HHS Secretary Sylvia Mathews Burwell in late April and later voiced worries that any form of expansion could mean Medicaid consumes an even bigger chunk of the state budget starting in 2017.

“We’re trying to cover as many people as we can afford,” said Herbert, a Republican who supports expansion but has not yet managed to find the right mix of ACA expansion and conservative variants to bring his legislature on board. “Is it 90,000 or 110,000 people? I don’t know what that’s going to work out to be right now.”

The enrollment surge underscores those fiscal fears.

“If you’re spending twice as much on this program than expected, that’s twice as much money that’s being added to the national debt,” said Nicholas Horton with the Foundation for Government Accountability, a conservative think tank that has sought to highlight how much expansion enrollment has gone beyond expectations. Even if the states don’t pay nearly as much as the federal government for Medicaid expansion, he said, “You’re still going to spend more money overall. That’s still taxpayer money.”

Colorado has repeatedly revised its average enrollment estimates to account for increases. Early on, officials had projected that for the fiscal year ending June 30, about 144,000 new adults would be covered in any given month. In November, they bumped the number to nearly 205,000. It currently stands at about 234,000.

Beyond the low-income adults that became newly eligible for Medicaid because of the health care law, states have long feared the budget impacts of the “woodwork effect” — people previously eligible for Medicaid who are only enrolling now because of the broader outreach surrounding Obamacare. Generally, even the states that have shunned Obamacare Medicaid expansion are seeing enrollment growth. The federal government does not cover as much of traditional Medicaid costs; on average, the feds’ share is 57 percent and the states pay the rest.

That “woodwork” phenomenon could create budget concerns for states if enrollment is significantly higher than projections, acknowledged Matt Salo, executive director of the National Association of Medicaid Directors. But even that outcome, he stressed, “still solves a health care problem.” These people are now insured, and that could lead to less cost-shifting and crisis care that was also a fiscal strain on states.

And for states that expanded under the ACA, he said, “you don’t do an expansion and hope no one comes.”

“Everything’s got to make sense in a budgetary environment,” Salo said. “But you balance that with, isn’t this what you were trying to accomplish?”

In California, a spokesperson for the Department of Health Care Services said enrollment for new low-income adults has been on par with projections, but as of March enrollment of those previously eligible for Medicaid was about 200,000 people higher than expected. Kentucky similarly had expected about 17,000 of the previously-eligible population to sign up, but enrolled nearly 37,000.

But Haynes points to a Deloitte report that shows the substantial economic benefits Kentucky has gained from expanding Medicaid. In 2014, 12,000 jobs were created, the report said. And had the state not expanded, it would have incurred nearly $100 million in costs between 2014 and 2021.

Some state officials say that even though enrollment ballooned in the first year, the trend may be leveling off. Michigan says while enrollment to date has exceeded estimates, the numbers have started to decline as it begins annual redeterminations to make sure beneficiaries are still eligible for coverage.

In Ohio, where John Kasich was among the first GOP governors to embrace the ACA expansion, officials expected 366,000 people to enroll in the first year; more than 485,000 did. The numbers as of March stood at nearly 528,000.

Ohio Medicaid spokesman Sam Rossi says in spite of the higher expansion enrollment, overall Medicaid enrollment remains below projections by roughly 27,000 people because the state hasn’t seen as much “woodwork effect” as it anticipated. He adds that total Medicaid general revenue spending as of March was below estimates by $330 million.

Nathan Johnson, the chief policy officer for Washington state’s Health Care Authority, said that in some ways the booming Medicaid enrollment growth isn’t surprising. But the exact reasons as to why projections were so off have yet to be identified.

“We still assume that it’ll more than break even in terms of the financial component, even after higher than expected enrollment,” he said. A recent report funded by the Robert Wood Johnson Foundation seeks to quantify the state’s savings from expansion, but it assumes Washington will only have 480,000 newly eligible enrollees in the current fiscal year — a figure that has already been exceeded.

Haynes, of Kentucky, has strong words for the states that are shying away from enacting the Obamacare coverage expansion. Every state is tight on money, and people who say they can’t give health care to the poorest individuals either don’t understand the issue or it’s “political fodder.”

“It is usually a political decision, not a policy and economic decision,” she adds. “[Expansion foes] can make up whatever they want, to dispute those facts. But it’s made up. These are the facts.”

Read more: http://www.politico.com/story/2015/05/skyrocketing-medicaid-expansion-obamacare-republican-governors-118011.html#ixzz3aXB0gd7U

OBAMACARE: DOCTORS TURNING AWAY FROM INDIVIDUAL TREATMENT IN FAVOR OF “POPULATION CARE”

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Obamacare treats not for the patient in particular, but for the patient on average, globally, or in the abstract

by MICHEL ACCAD | MISES.ORG | MAY 18, 2015

The economics profession today continues to face mounting criticism for its failure to predict and explain economic crises.

According to Austrian school critics of Keynesian and neoclassical methods, this failure is in large part due to a foolish determination to bring into economics the mathematical precision of the physical sciences. To achieve this precision, neo-classical economists disproportionately focus their inquiry on global measures of economic activity: gross national product, aggregate demand, global supplies of money, goods, or labor, and other variables that lend themselves to quantification and numerical modeling. Lost in mainstream economic analysis is the attention due to the individual economic actor who, by virtue of his or her power of self-determination, is ill-suited for the equation or the graph.

A similar love affair with quantitative methods has rapidly taken over the medical field over the last several decades. As in mainstream economics, equations and predictions can only come about when one turns one’s attention away from the individual patient to focus instead on the aggregated group, or population, as the prime target of analysis and intervention. Thus, population medicine is an apt term to describe the discipline that seeks to mathematize medical practice by caring not for the patient in particular, but for the patient on average, globally, or in the abstract.

For the promoters of population medicine, the individual clinical interaction is of no interest. It is dismissed as quaint, anecdotal, and inconsequential to a proper understanding of health issues. Instead, the data of interest are those garnered from large epidemiological studies and clinical trials. From such research, one can derive “risk factors” for disease, elucidate the “determinants of health,” and promote prescriptive measures in wide swaths.

A Key to Centrally Planning Health Care

Advancing the convenient fiction that whatever is good for the group must be good for the individual, population medicine has become an indispensable framework of analysis for the central planning of health care. Accordingly, government agencies can now avail themselves of the findings of this discipline to decide which services, drugs, and interventions should be paid for and promoted, and which must be deemed unnecessary or even fraudulent. The decisions can thus be rendered under cover of “scientific proof.”

An example of activities promoted by population medicine is the “risk calculation,” which doctors are expected to embrace, or else face penalties for practicing outside of the desired norm. Risk calculation involves inputting a handful of patient factors — age, weight, cholesterol, blood pressure, and the like — into a formula to obtain the patient’s “personal risk” of dying or suffering a specific outcome in the future. Based on this mathematical insight, an intervention is prescribed. A patient can thus enjoy the privilege of being treated like a number not just figuratively, but quite literally.

Needless to say, the architects of population medicine overlook that the concept of “personal risk” is rather devoid of meaning, as statistician Richard von Mises explained many decades ago. Willful or naïve, this oversight is turning medicine into an enormous risk management enterprise aimed at solving an impossible game of health optimization.

According to the wisdom of population medicine, for example, to be healthy is to confine our weight, our blood cholesterol, or our blood sugar to an ever-more narrow range of “normal values” defined — and repeatedly revised — not on the basis of any physiological reality, but by the will of committees of medical technocrats. With each new revision in the definitions of what constitutes a “normal” blood pressure, blood cholesterol, or blood sugar, millions of hapless citizens whose numbers happen to fall outside the desired range are instantly turned into patients, to the great delight of the pharmaceutical industry.

And it’s not just anthropomorphic variables which are so narrowly defined. What we eat, how much we drink, how long we sit, and how fast we move are all of interest to population scientists eager to show us the narrow path to healthy living measured in precise servings per meal, ounces per day, hours per week, or miles per minute.

The scientific advice, unfortunately, does not always lead to a healthy outcome. A population-wide push to discourage consumption of saturated fats, for example, led to a population-wide increase in the consumption of carbohydrates, and thus may have unwittingly played a role in the obesity epidemic of the last twenty years. At the very least, lifestyle fads advocated through the bullhorns of population medicine are undoubtedly causing epidemics of food and exercise neuroses.

Population medicine ambitiously aims to improve the health of entire nations. To do so, it proceeds to sketch an ever-more quantified but all-the-more unrealistic portrait of the human being, to be analyzed by those who enjoy directing medical care from the remote comfort of their academic or governmental chairs.

Dem Congressman Believes What the GOP Is Doing Could Lead to Another Rising Up ‘Like Baltimore’

BY COLIN CHOCOLA

For the first time in nearly a decade, Congress has passed a GOP-backed budget.

Democrats have attacked the bill for cutting domestic spending, securing defense spending and seeking to repeal the Affordable Healthcare Act. Now, at least one Democrat thinks this budget will cause violence in poor communities.

Rep. Hank Johnson (D-Georgia) was on WABE radio program “A Closer Look” on May 6, and after discussing his opinion that “free-marketers” are winning the fight, he said:

If we’re not careful, the have-nots in the country will rise up like the people in Baltimore.

Johnson continued, saying that there were economic issues at the heart of the violence in Baltimore:

What happened in Baltimore stems from deeper economic issues and if you would take a ride down the streets of some of the greatly impoverished areas of Baltimore where change has not come.

As the conversation continued, program host Denis O’Hayer, wanted to clarify:

You’re saying budgets like this can lead to violence?

Johnson confirmed O’Hayer’s question.

“Yes, I am,” he said.

Conservatives Would Be Better Off If Harry Reid Still Ran The Senate

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BY JOHN HAWKINS

The whole case for reelecting mediocre Republicans has been, “Sure, they stink, but do you want a Democrat in office? They’re the lesser of two evils.” That’s an argument I’ve used many times myself. However, what happens when it’s no longer true? What happens if conservatives realize that they would be better off RIGHT NOW if Harry Reid were still running the Senate?

Because we would be.

Instead of reflexively saying, “That’s ridiculous,” think about what happened during the last congressional cycle.

Democrats refused to compromise with Republicans on anything and the GOP was desperate to show its opposition to Barack Obama’s unpopular agenda; so Republicans had little incentive to vote for bad legislation. That led to complete gridlock. Now that might not be the ideal outcome, but conservatives believe that no legislation is preferable to bad legislation.

Instead we now have a situation in America where Democrats pass far left wing legislation when they’re in charge, nothing happens when Congress is split and Republicans pass moderately liberal legislation to show they can “get something done” when they’re in charge.

Just look at what has happened since Republicans took over the Senate after spending the entire campaign cycle promising that they would fight Obama tooth and nail.

* After swearing that they’d stop Obama’s illegal executive amnesty by blocking DHS funds, the GOP Leadership in the House and Senate caved and worked with the Democrats to fund Obama’s amnesty despite the fact that the majority of House Republicans opposed it. The promise to fight executive amnesty was as important as George W. Bush’s “Read my lips, no new taxes” pledge and the GOP didn’t even hold out for TWO MONTHS before it broke it.

* Despite the fact that they’ve PUBLICLY railed against Obama’s terrible nuke deal, Senate Republicans just voted to strip Congress of its ability to block Obama’s treaty with Iran. Publicly, they’re claiming that they’re holding Obama accountable, but in actuality, the bill they’re supporting will in effect allow him to do whatever he wants in Iran. Not only is it bad legislation that turns the Constitution on its ear, it’s insulting. They think everyone is so stupid that we can’t figure out what they’re doing.

* Even though Loretta Lynch said she agreed with Obama’s illegal executive orders, she couldn’t name any differences she had with Eric Holder, and she essentially said that she thought Obama had no limits under the law, she was confirmed as Attorney General with Republican votes.

* Republicans, including RAND PAUL – let me repeat that, RAND PAUL – are blocking an investigation that’s designed to kill fraudulent OBAMACARE subsidies to Congress. When even Rand Paul wants his fraudulent Obamacare subsidy more than he wants to protect the taxpayers, it doesn’t bode well for the country.

* The GOP is about to shove through a secret Trans-Pacific Partnership trade deal. Not only have the details of the trade deal been withheld from the public (Remember how well it worked out the last time we had to “pass a bill to see what’s in it?”), but what we do know about it is disturbing. According to Jeff Sessions, it limits the power of Congress to amend all international trade agreements during the deal, it allows the President to change the deal after the fact without the approval of Congress and it is likely to massively increase the number of foreign workers coming into the U.S. Perhaps worst of all, it would provide a backdoor method to limit American sovereignty because a signed treaty supersedes American law. In effect, it gives the President the power to adopt certain foreign laws related to the trade agreement without getting the approval of Congress. This bill is a Frankenstein’s monster waiting to happen and the Republican Party is working with Obama in secret to bring it to life.

* If the Supreme Court kills the Obamacare subsidies (which is entirely possible), it will in effect kill Obamacare. Without the subsidies, the whole program will collapse. Instead of saying, “We didn’t vote for it and we told you it was unconstitutional from day 1,” Republicans are openly acknowledging that they plan to save Obamacare. After all these phony promises to repeal Obamacare, after all these votes, after all the polls showing that it’s unpopular, the GOP Leadership wants to buy into Obamacare so Americans can now blame BOTH PARTIES for the disastrous legislation.

Everything the Republicans have done since they won in November has been one long “Screw you” to the people who voted for them. They’re like a 0-16 football team that gets angry with their fans for failing to appreciate how wonderful they are despite the fact that they lose every game.

We live in a Bizarro world where the Republican politicians don’t work for the voters who put them in office. In the real world, the GOP Leadership in Congress along with most of the Republicans in the Senate work for whatever lobbyist is willing to give them the most money while the voters are treated like THEIR employees. They’re for sale and the voters have been sold out because our pockets aren’t deep enough to compete with the people giving them campaign contributions.

Well, in 2016 there will be an awful lot of Republican senators up for reelection and they’re certainly not going to have much of a record to brag about. Couple that with the fact that even the French in WWII put up a bigger fight than John Boehner, Mitch McConnell and the rest of the Republican “leadership” have so far and there’s really not going to be much of a reason for conservatives to vote for Republican senators. In fact, the only thing they ever seem to be able to offer is that, “Well, it’s better to have us in charge than the Democrats.” What happens if people realize that’s not even true anymore?

IRS criticized for not helping people calculate ObamaCare subsidies

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BY SARAH FERRIS

A federal auditor is urging the IRS to help people more accurately predict the amount of their ObamaCare insurance subsidies after a tax season in which nearly half of Americans had to pay some of the total back.

The auditor found that while the IRS did create an online tool that accurately calculates a person’s subsidies last year, only the agency’s staff members were allowed to use it. The IRS did not release a public version before filing season.

The IRS has since “reevaluated” its decision not to provide a public subsidy calculator, the auditor wrote in a report released Friday.

The agency told the auditors that it had previously decided not to finish the public version “because approximately 80 percent of individual taxpayers use tax preparation software to file their tax return.”

But the Treasury inspector general’s office pushed back, arguing that the IRS “has an obligation to provide the same level of assistance to all taxpayers.”

The inspector general confirmed that the IRS’s instructions about ObamaCare subsidies were accurate but warned that it was “complex.”

The Obama administration has acknowledged that calculating tax subsidies is complicated and has partnered with tax-filing companies to get the word out.

About half of people who received subsidies during the first year of ObamaCare owed money on their taxes this year, according to a new report by the Kaiser Family Foundation. Nearly all families saw some change in their income level after calculating their subsidies.