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The individual mandate may collapse health reform

Richard Reece, MD
Policy
April 3, 2010
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Obamacare faces a shaky future because of its call for an individual mandate. This mandate requires people to buy insurance or face income tax penalties, which the IRS would presumably enforce.

As I write, attorney generals in 35 states are in the process of challenging the individual mandate as unconstitutional.

The individual mandate issue is important.  Kill it, and you kill Obamacare.

Why? Because the individual mandate is the political mechanism for controlling costs by spreading risk and dropping cost. The mandate allows the government to bring enough people into the insurance pool to make it affordable. It is a form of universal taxation.

The only other way to spread the risk is by changing the tax code to bring about universal coverage through a single-payer system, which is politically unpalatable to most Americans.

Feelings run high on the individual mandate issue. In a previous entry, “Health Reform Mandates – A Sleeper Issue,” I led off with a yell from a New Hampshire café customer, who shouted, “I won’t pay it! And I’ll shoot the first person who tries to make me go to jail because I will not buy health insurance.”

Then, I added, “Every legislative act has a sleeper issue. With health reform, the individual mandate is that issue. The very term, ‘mandate’ runs against the grain of individualism, a strong trait in American culture.”

Why is the individual mandate a sleeper issue?

One, conservatives and independents strongly oppose the mandate because it will be unpopular with their constituents, whose main issues are an overreaching government depriving us of our individualism and driving us into deeper and deeper national debts.

Two, the legal issues are murky and muddled with lawyers deeply divided about whether the mandate is or is not constitutional. There’s a mare’s nest of legal opinions out there, meaning the issue is untidy and confusing and political. As Timothy Jost, a lawyer explained in the March 11th NEJM of the resistance of states to the individual mandate, “These resistance efforts are not about law – they are about politics.”

Three, it will difficult and expensive for the IRS to enforce a tax penalty on individuals who do not comply with the mandate, which starts in 2014 and is fully phased in on 2016. There are a number of exceptions, including those who cannot afford it and those who oppose it on religious grounds. Also the Senate bill waives criminal penalties and prohibits the IRS from imposing liens on taxpayer’s incomes or property for failing to pay. In other words, it invites individuals to flaunt the law and may well be unenforceable.

Richard Reece is the author of Obama, Doctors, and Health Reform and blogs at medinnovationblog.

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