One of the more controversial elements of ObamaCare is the mandate for most individuals to purchase insurance beginning in 2014. There is really no precedent for a federal mandate of this scale requiring individuals to purchase a product or service. So not surprisingly a number of state Attorney Generals have indicated they will be filing suit questioning the constitutionality of this provision.
Of course the individual mandate is also very risky from a political standpoint, as the Democrats who orchestrated the passage of this bill are mandating not only that the young and healthy obtain insurance, but also that even their most fervent liberal constituents must purchase this coverage from the “evil”, private insurance industry.
Republicans for their part have focused on the fact that this mandate will be enforced via threat of a financial penalty (or tax), with the added assumption that it is the dreaded IRS which will be enforcing this. And sure enough, it’s already been reported that the IRS anticipates hiring possibly in excess of 15,000 additional personnel to deal with the collection of the individual mandate, and other tax related provisions within the bill.
However, it turns out that the Democrats who crafted this bill significantly – and I mean significantly – hamstrung the ability of the IRS or any other federal agency to enforce or collect on this mandate. Here is what the federal Joint Committee on Taxation had to say about this issue in a report released earlier this week:
Individuals who fail to maintain minimum essential coverage in 2016 are subject to a penalty equal to the greater of: (1) 2.5 percent of household income in excess of the taxpayer’s household income for the taxable year over the threshold amount of income required for income tax return filing for that taxpayer under section 6012(a)(1);67 or (2) $695 per uninsured adult in the household. The fee for an uninsured individual under age 18 is one-half of the adult fee for an adult. The total household penalty may not exceed 300 percent of the per adult penalty ($2,085). The total annual household payment may not exceed the national average annual premium for bronze level health plan offered through the Exchange that year for the household size…
The penalty applies to any period the individual does not maintain minimum essential coverage and is determined monthly. The penalty is assessed through the Code and accounted for as an additional amount of Federal tax owed. However, it is not subject to the enforcement provisions of subtitle F of the Code. The use of liens and seizures otherwise authorized for collection of taxes does not apply to the collection of this penalty. Non-compliance with the personal responsibility requirement to have health coverage is not subject to criminal or civil penalties under the Code and interest does not accrue for failure to pay such assessments in a timely manner.
According to a footnote in the report, “subtitle F of the Code” is the portion of the tax code which grants the IRS the authority to assess and collect taxes. In other words, as the law is written the federal government has no legal authority to enforce this mandate, nor will it have any recourse to collect any penalties that go unpaid!
This issue was actually the subject of a very amusing exchange between Rep. Anthony Wiener and Bill O’Reilly on Wednesday. While the facts seem to vindicate Rep. Wiener who argued repeatedly that the bill would not criminalize non-compliance with the individual mandate, this is actually the worst possible news for those who believe in the merits of the mandate and the bill in general.
Because without an effective mechanism of enforcing the individual mandate, the entire system is likely to collapse. (The individual mandate is the “third leg of the stool” as many a liberal has been pointing out for months.) Given that the bill also bans insurance companies from denying coverage based on pre-existing conditions, WHY WOULD ANYONE OBTAIN INSURANCE COVERAGE PRIOR TO NEEDING IT? This was already going to be a problem with the relatively low cost of the penalty, but take away any meaningful enforcement of it and it is a complete and total joke.
The net result will be an ever increasing shift of healthcare costs on to those who remain in the insurance system (or to tax payers), and possibly even the bankruptcy of the insurance industry. Given all the double-talk the past year over the public option, and the demonizing of private insurers, it is hard not to wonder whether this was by design. But let’s give our Democratic friends the benefit of the doubt, in which case this represents an inexcusable level of incompetence from the people we have just entrusted with overseeing one-sixth of the economy. Nice job guys.