Obamacare Fines, For Poor People Only

Hearken back to how the unaffordable Affordable Care Act was promoted with the mandate attached. It was called a “fine” or “penalty” all the way up to the point it went to the Supreme Court. Then, the description of the mandate changed from a penalty to a “tax” you will pay if you did not buy an insurance policy that the obamacare_going_to_hurtgovernment approves of.

That the government does not approve the policies of hundreds of thousands of insured people is the reason insurance companies are notifying their customers that their policy does not meet the “minimum requirements” as proscribed by Obamacare and is being cancelled as of the end of the year. (Barack Obama, “If you like your policy, you can keep your policy.”) Oh never mind.

Which brings me to the mandate, the penalty. The alternative revenue stream that is supposed to make the government exchange insurance policies “affordable.”

Aside from people finding out how expensive their government exchange insurance policy with high deductibles will be, presuming the healthcare.gov website gets fixed, the details of how the penalty is collected is where the program breaks down. Long story short, if you pay taxes already and don’t get a tax refund, and choose not to buy health insurance, you’re home free. If however, you are like many low income people who revel in receiving a tax refund (which is actually you paying more taxes than you owe), and choose not to buy the expensive health insurance, the government will deduct your penalty from your refund. You’ll pay your fair share. (Obama’s words) So where does this end up? Right where Obama intended it to end up. He will try to take Obamacare to its final destination, a single payer system where the private sector health insurance industry becomes extinct and the whole country is on Medicare.

Regardless whether you believe that a single payer system is the goal, that Obamacare is the pathway to a single payer system (like Obama himself has said), you better believe that not only does the mandate have no teeth, but it punishes low income workers while giving everyone else a pass on paying the so-called mandated penalty.

The Joint Tax Committee prepared a summary of Obamacare that includes this discussion of the mandate:

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.

As I understand it, the only way the IRS can possibly collect the penalty is by withholding your tax refund. No problem: if you arrange your taxes so that you don’t overpay, the penalty can never be collected from you. Some observers who should know better continue to tell young people they should pay the penalty and forgo expensive insurance. No: young people, if they want to follow their self-interest, should forgo expensive insurance and NOT pay the penalty, because it can never be collected from them.

Since Obamacare is, by all accounts, “settled law,” it will be interesting to see the wailing from Democrats to change it when the people who look to them for sustenance find out that the government is dipping into their tax refund while taking nothing from those rich people.

The beauty of this train wreck is that Republicans have nothing, zip, zero, nada, to do with it. They didn’t write it, they didn’t amend it, and they didn’t vote for it. But they do have an alternative that does not increase the debt, will actually work to decrease premiums, doesn’t involve raising taxes or imposing fines on poor people, has no death panels, and, doesn’t put the government between you and your doctor. It’s called H.R. 2300, the Empowering Patients First Act of 2013.


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