March 29, 2010 Posted by John at 6:59 PM

[W]ithout 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.

Hmm. Bug or feature? We report, you decide. A reader writes:

Absolutely essential and fundamental to the very design of the Obamacare bill is the individual mandate to require purchase of prescribed health insurance. And yet in what is an amazingly revealing feature of the bill there is literally no provision for enforcement of the mandate. While this has been known for some time -- it was discussed a few weeks ago in NRO in the context of resistance or civil disobedience to the mandate -- it is only now getting the exposure it deserves.

As the linked article makes clear, while the bill does provide for fines to enforce the mandate through the income tax system....the IRS is explicitly prevented from collecting the fines by assessments, liens or seizures, no civil or criminal penalties attach to failure to pay such fines and no interest accrues from the date the fine is due!! This is actually amazing and cries out for explanation.

In my view, this is not the result of a simple oversight or error...quite the contrary. This is a feature, not a bug. We can be sure of this because they had to go to the trouble of specifying that enforcement was prohibited; silence would have meant that the normal IRS enforcement powers were available and presumed to be used to ensure that the mandate legislated by Congress was carried out. Normally the simplest explanation would involve stupidity, incompetence, error, haste or some other ordinary failure. In this case I think the explanation has to be, since it was intentionally put in the bill, that the architects of Obamacare intend that the individual mandate will fail....and guarantee it by actually affirmatively prohibiting enforcement.

Why would they do this? One reason is that, despite all the confident left wing bluster, they may very well be afraid that, given the extraordinary implications for the vast expansion of government power, the Supreme Court may well find, as they should, such a mandate to be unconstitutional. [Ed.: Unlikely, in my view.] That would undermine the whole program and is a complication that the Obama administration I am sure would prefer to avoid. As well as avoiding nasty scenes of property seizures or wage garnishments lack of enforcement would also prevent an individual desiring to make a test case from having standing to sue. (Why the approach taken by the Attorney General in Virginia in relying for standing on conflict of state and federal laws is clever.)

The real reason, I suspect, is more insidious -- quite simply to destroy the private health insurance industry and create an irresistible demand for expansion of the program to a public option and ultimately to single payer provision. It is undeniable that guaranteed issue of insurance at ordinary rates for those with preëxisting medical conditions is popular; but forcing insurance companies to cover them at average rates cannot possibly work unless healthy younger people are forced into the risk pool at rates higher than what their risk rating would otherwise be. Without the mandate, in other words, the insurance companies cannot possibly be viable and also cover preëxisting conditions at average premium rates.

Quite simply, Obamacare has created a ticking time bomb for the insurance industry. Those with preëxisting conditions will be covered.....and demand continuation of the coverage at prescribed rates....and those who ignore the mandate, presumably anybody at all affected by it, face no consequences. As costs spiral out of control, premiums will have to rise and subsidies increase. Insurance companies would have to either fold or shift costs....to those covered by employers....becoming a perfect target for left wing demagoguery and vilification. The only way out as more and more of those covered by employers get pushed into the exchanges as costs get shifted to them and employers no longer offer insurance -- yet another intended consequence -- is the public "option" or outright nationalization through a single payer plan.

We know that a single payer nationalized health care plan is the long term objective and intention for proponents of Obamacare and has been all along. They're completely disingenuous about how "incremental" and "modest" the program is. The astonishing fact that they deliberately prohibited enforcement of a critical component of the plan tells you all you need to know. It will intentionally create a crisis...a feature, not a bug....and a crisis is something this crowd never wants to go to waste."

http://www.powerlineblog.com/archives/2010/03/025954.php

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"Joint Committee on Taxation Confirms that ObamaCare Does Not Enforce Individual Mandate

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."

http://biggovernment.com/mrichmond/2010/03/26/joint-committee-on-taxation-confirms-that-obamacare-does-not-enforce-individual-mandate/