THE SOFT UNDERBELLY OF OBAMACARE

8/28/13

It’s effects on premiums and costs look to be highly unpopular, its perverse incentives are already harming employment, its state exchanges will hand out costly subsidies without the necessary checks against fraud, the promises of its champions—from keeping costs down to keeping the coverage and doctors your—are proving empty, its lawless implementation is anathema to our system of government and on and on. Most essential part of obamacare is also among the most unpopular; the individual mandate. This is where efforts to use the GOP’s limited leverage should be concentrated. The purchase of government sanctioned health insurance form just another consumer choice into a social obligation, if not a legal decree.
In NFIB vs Sebelius last summer, chief justice Roberts found that congress did not have the authority under the commerce clause to make the purchase of health insurance obligatory. Only way it was found to constitutional was as a tax on the uninsured: citizens can either purchase insurance or pay that tax. Both options are perfectly permissible under the law. Roberts decisions suggests that congress could never raise the tax very much because that would tip the balance away fro providing a genuine choice to imposing a de fato obligation to buy coverage. In 2014 an uninsured household must pay a tax of only $95.00 or 1% of household income, whichever is greater. For a family with a $40,000 income, that’s either a $400 uninsured tax, or about $1,800 in premiums for insurance offered in the OBC exchanges after subsidies they’d receive. Some won’t bother to pay the uninsured tax either, because the ability of the IRS to collect it form them is severely restricted. The only way the government can ever recapture the money is by reducing future tax refunds and then it can only do so a little at a time.
They are counting on the mandate to transform the landscape of our health care system by driving millions of relatively young and healthy Americans to sign up for OBC insurance, in many cases cost them much more than today’s insurance options and provide them with less valuable protection against risk than today’s insurance does, under the laws new insurance rules, if they decide to opt out they can always opt back in within a year if they get sick with no penalty.
Removing the individual mandate would deflate these claims and make full repeal or wholesale change far more likely. The mandate generally ranks as the most unpopular provision of OBC. A recent survey found only 12% of Americans supported it.
Obama himself expressed opposition to a mandate in he 2008 election—only to reverse himself when it comes time to write a bill. Last month well aware of the mandates unpopularity, the house wisely seized on the opening presented by the administrations one-year delay of the employer mandate to push not only for a genuine statutory delay of the employer mandate but also a corresponding and simultaneous delay of the mandate for individuals. Delaying the employer mandate also makes it much more difficult to fairly enforce the individual mandate
The administration decision gave a reprieve not only to employers but also to insurance companies. They do not have to report who is enrolled in their plans in 2014, thus the IRS will have no independent data with which to verify who is covered and who isn’t, by employers or directly by insurers and will have to rely entirely on self-reporting to determine who should have to pay the tax for being uninsured. This is a recipe for rewarding the dishonest and penalizing the rest.
Employers do not have to offer insurance in 2014 but will have to in 2015, while workers still must get coverage or pay a fine in 2014, workers will face a counter-productive and complicated ping-pong effect. Only way for some workers to avoid the uninsured tax would be to get coverage in the OBC exchanges. But in 2015 when the employer mandate will be pushed into accepting what their employers offer and dropping their exchange coverage.
This discontinuity in insurance coverage will create needless complexity and problems for many families and their health care providers. The pressure to delay it again will be immense.
The individual mandate is simultaneously the most vulnerable and most important element of the law. That is the ground that opponents should attack and that OBC champions must be made to defend.

Source==weekly standard, james capretta, yuval levin

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