The Toothless Mandate?

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Jason Kuznicki

Jason Kuznicki is a research fellow at the Cato Institute and contributor of Cato Unbound. He's on twitter as JasonKuznicki. His interests include political theory and history.

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  1. Avatar North
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    says:

    Jason would you mind sharing your opinions on the other government mandate as well if you get a chance? Mike answered succinctly on his own but I’d like your opinion since in my mind the individual mandate is merely the missing half of the equation that was begun when government began compelling hospitals and medical providers to provide services regardless of the ability of patients to pay. After all, it was then, and not now with Obamacare, that medical costs were fundamentally socialized, albeit in an inefficient and unsupervised manner.Report

    • Avatar Jason Kuznicki in reply to North
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      says:

      @North,

      My understanding is that emergency care of the indigent by hospitals is not a terribly significant share of overall medical spending. I have no arguments with requiring this spending, and I do not agree that Obamacare is a reasonable or measured step therefrom.

      I might be wrong on these conclusions, however, so I haven’t weighed in. Besides, I’d say I’m already getting my fair share of abuse. (It’s not a good day until they start attacking my employer!)

      I remain genuinely curious about the enforcement provisions of the individual mandate. Can anyone help me out on these?Report

      • Avatar Trumwill in reply to Jason Kuznicki
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        says:

        @Jason Kuznicki, My understanding is that emergency care of the indigent by hospitals is not a terribly significant share of overall medical spending.

        Yeah, according to Slate, it accounts for 3% of overall spending overall and most visits are acute and most visitors insured. I always foul things up when I try to link to anything on TLOOG, so you can find the article by googling “Are Most Emergency Room Visits Really Unnecessary.”

        I wish I could be of more help with the mandate’s teeth. I read somewhere that they might take it out of tax returns, though (a) I don’t know how true that is and (b) a lot of people don’t get $800 back in tax returns.Report

      • Avatar Michael Drew in reply to Jason Kuznicki
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        says:

        @Jason Kuznicki, The statement I’ve seen is that you’ll be treated like any other tax delinquent. which, for a $700 delinquency means not a very strong possibility they’re going to come after you with guns. Also – will it simply be deducted from your refund if you have one? well here’s where the reality starts to set in. The employer mandate takes effect if I’m not mistaken before the full IM, so for anyone who’d be getting at least a $700 rebate, they’re likely going to be insured pretty much automatically before it comes to that. So we end up talking about the unemployed, and those working for small employers (for whom the EM takes effect much more slowly). I can only imagine that the effort will not be to enforce the mandate against the unemployed, but rather to put those resources into registration for Medicaid. So it comes down to those people working at businesses who remain exempt from the employer mandate. My guess would be that a few of them will get hassled about how they have this back health penalty tax bill, but that it’ll be forgotten if they just make use of the available subsidies and the exchanges and sign up for a health plan. After that, you become delinquent, and, again, from what I understand, go into the general pool of tax delinquents. I can’t imagine that TPTB will be pushing for a special push against people delinquent only due to the mandate penalty, so my guess is that ultimately the people who feel the hard hand of the law on the mandate penalty will be those who add it on top of other significant tax delinquencies. But that’s total conjecture.Report

      • Avatar Michael Drew in reply to Jason Kuznicki
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        says:

        @Jason Kuznicki, Do you have a sense, Jason, of who the class of people are who are going to flout the mandate, causing systemic cost problems to the scheme?Report

        • Avatar Jason Kuznicki in reply to Michael Drew
          Ignored
          says:

          @Michael Drew,

          Not a clue. I was more struck by the apparent claim that there would be a penalty, but no penalty for not paying the penalty. It seemed so far out of the ordinary, to say the least.Report

        • Avatar Michael Drew in reply to Michael Drew
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          says:

          @Michael Drew, I guess it’s sounding like the penalty for not paying the penalty is to be thrown in with people who owe the IRS $700 and experience whatever it’s like on average to be such a person.Report

        • Avatar Trumwill in reply to Michael Drew
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          says:

          @Michael Drew, the same contingent of the population that voluntarily chooses not to have insurance now. The young, the healthy, those that would rather spend their insurance premiums on something else.

          I’ve never gone long without insurance, but a big reason for that is that I wanted constant coverage for PEC reasons. Would a $700 change my tune? Probably not, since the insurance plan I did buy (if it would even be available anymore) would not have been sufficient to avoid the penalty anyway and I would have been paying for both weak, catastrophic insurance and a penalty.

          So… under the old model I got weak insurance. Under the new model I probably would have just paid the fine.Report

        • Avatar Michael Drew in reply to Michael Drew
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          says:

          @Michael Drew, Except a lot of those people will become covered by a requirement that their employers compensate them in part with contributions to a qualifying health plan.Report

        • Avatar Trumwill in reply to Michael Drew
          Ignored
          says:

          @Michael Drew, I’m not sure I follow. If Joe Smith works for TitanCo and TitanCo has an insurance plan that covers 75% of the premiums, if Joe doesn’t want to pay the other 25% he is covered anyway?Report

        • Avatar Michael Drew in reply to Michael Drew
          Ignored
          says:

          @Michael Drew, Joe’s quarter will come out of his paychecks. He won’t be given a chance to say, no don’t do that. How many Joes do you think there are – who work at a place that offers health insurance at a high rate of company contribution (usually more than 75% even), but turn it down, who aren’t covered by a spouse’s or other policy? I honestly don’t think it’s a number that is material to the cost structure of this law. Could be wrong.Report

    • Avatar Trumwill in reply to North
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      says:

      @North, that was begun when government began compelling hospitals and medical providers to provide services regardless of the ability of patients to pay.

      Worth noting here that this only applies to ERs and emergency situations. My wife, an MD, is not required to treat anyone that can’t pay, except when she’s on ER-duty.

      The rationale behind the mandate has less to do with this and more to do with the PPACA requirement that Pre-Existing Conditions be covered.Report

  2. Avatar Trumwill
    Ignored
    says:

    The lack of teeth is one of the problems I have with the mandate. At the same time, I can’t endorse throwing someone in jail for failing to get health insurance, either. That’s a big part of the bind we’re in.

    There’s also the fact that the penalty, even if enforced, is so marginal. It can easily be worth it to pay under a thousand dollars a year to forego insurance if you know that the second you need it you can simply get it and have everything covered. The only real downside is if you have regular medication expenses or if you’re worried about falling off a latter or something ER-oriented… but people don’t worry about that nearly as much as they worry about cancer and the like.

    I stand by my previous proposal. Allow insurance companies to deny PEC only as long as someone was uninsured (with some sort of cap) or the total number of months they’ve been uninsured in the past year. That’s a system I would personally be far less likely to game.Report

  3. Avatar Jon Marcus
    Ignored
    says:

    You want to file fraudulent tax documents and then offer “The IRS said they wouldn’t look into it” as a defense?

    North, HCR offers considerably more than just ER care. Mandated ER care exists now. (And does impose significant costs on hospitals.)

    Trumwill, I like your plan. If nothing else, it’s the first serious alternative to a mandate I’ve heard.Report

    • Avatar Jason Kuznicki in reply to Jon Marcus
      Ignored
      says:

      @Jon Marcus,

      I know, it sounds nuts. So what’s going on here? Why are they saying they won’t look into it? My answer is that of course the IRS will look into it. Of course they will. And what FactCheck.org is passing on isn’t a fact at all — it’s high-grade bullshit.Report

  4. Avatar Jon Marcus
    Ignored
    says:

    @Jason Kuznicki, not sure that’s fair. They’re fact-checking the claim that the IRS will be sending 16,500 armed agents after you. Straw man? I dunno. The claim has been made by a number of congress-critters, so I’d say it’s reasonable to refute it.Report

    • Avatar Jason Kuznicki in reply to Jon Marcus
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      says:

      In the course of their fact-checking, they come away saying that there pretty much won’t be any penalty at all. Is that accurate? Because that’s the claim I’d like to know more about. I find it very hard to believe, almost as hard to believe as the 16,500 armed IRS agents (a claim I don’t believe either).

      (And yes, when Republican candidates say that 16,500 armed IRS agents will come after you, it really is a strawman — it’s not something the opposition has proposed or was ever thinking about doing. The Republicans are the ones making the strawman here, not FactCheck.org. I agree that I should have expressed this more clearly.)Report

  5. Avatar Boonton
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    says:

    This seems to invite massive noncompliance, no? If all I need to do is send the IRS a form — which they won’t look behind — saying that I have the proper insurance, then it really is just that easy to evade the mandate.

    That’s not what you cited:

    He said insurance companies will issue forms certifying that individuals have coverage that meets the federal mandate, similar to a form that lenders use to verify the amount of interest someone has paid on their home mortgage.

    The form is coming from the insurance company to the IRS. If you use MS-Word to create a ‘form’ from “Mr. Spiffy’s Discount Health Insurance Inc.” you might set off some flags in the various databases that I’m sure the IRS uses….just as much as if you created a ‘fake bank’ and tried to issue a form saying you paid a boat load of mortgage interest.

    While we are on this subject this certainly makes the mandate appear very much like a tax from the Constitutional argument. It isn’t enforced by criminal law, the primary system of compliance is thru the IRS using as a model other aspects of tax law.Report

    • Avatar Jason Kuznicki in reply to Boonton
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      says:

      @Boonton,

      The claim, in the very same passage, was thatthe IRS “won’t look behind” these forms.

      As I’ve said repeatedly, I have a hard time believing this claim. Why on earth would they make it? But they did. That’s what invites noncompliance.Report

      • Avatar Boonton in reply to Jason Kuznicki
        Ignored
        says:

        @Jason Kuznicki, I suspect what was meant is the same in regards to the mortgage interest deduction. Bank A sends a form to the IRS saying you spent $7,500 on interest in 2009. You get a copy of the same form, you do your taxes and claim a deduction of $7500.

        The IRS doesn’t normally ‘look behind’ in the sense that they go hunting for cancelled checks and statements to add up to that $7500. You’re claiming $7500 and that matches the banks filing that you paid $7500. If you claimed $7500 but no bank filed that you paid any interest then the story might become kind of different.

        I suspect what he means then is that if Big Insurance Company says you have insurance and you say you have insurance from Big Insurance Company the IRS isn’t going to demand to see the contract to check off that it covers you for all the ‘necessary’ stuff.Report

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