NCPA - National Center for Policy Analysis


March 31, 2010

Shortly before Barack Obama signed the health care bill, Republicans on the House Ways and Means Committee created a stir with a report suggesting the new health care legislation will lead the Internal Revenue Service (IRS) to hire as many as 16,500 new agents, reports the Wall Street Journal.

In testimony before a House Ways and Means subcommittee last Thursday, the IRS commissioner, Douglas Shulman, deflected questions about the agency's precise role vis-à-vis health care but  reassured citizens that the bill does not "fundamentally alter" their relationship with the IRS.  About the penalties associated with the mandate, he was less clear.

In November, a report by the Congressional Budget Office and Joint Committee on Taxation estimated that nearly half (46 percent) of the mandate penalties will be paid by Americans under 300 percent of the poverty line:

  • In today's dollars, that works out to individuals making $32,500 a year.
  • For a family of four, it's $66,150 a year.

The original House bill opened the door for criminal sanctions against Americans who didn't buy health insurance and pay the penalty.  The Senate bill did the same until Sen. John Ensign (R., Nev.) successfully pushed to amend the bill.  Even so, the final language begs the question:  Who's going to enforce the mandate, and how?

We are left with one of two possibilities, says the Journal:

  • The penalty for not having "minimal essential coverage" is fully enforced, in which case Americans of relatively modest means will get a lesson in how the government deals with people who don't pay up.
  • Or the penalty for violating the individual mandate will become like the fines for not filling out your Census form -- in other words, unenforced.

If the second scenario is the case, the costs of this legislation will be even higher and more hidden than we have been led to believe.

Source: William McGurn, "The Tax Police and the Health Care Mandate," Wall Street Journal, March 29, 2010.

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