Enforcing the Individual Mandate

19 Apr

The new law of the land requires everyone to have health insurance or else pay a fine. Let’s put aside for a moment the policy rationales for and against such a requirement and the legal questions over the Constitutionality of such a mandate and ask the most practical of all questions: How technically feasible will this individual mandate be? Said another way, how will the federal government enforce the individual mandate? In fact, will they even be able to do so?

The Atlantic’s Megan McArdle asks just this question and finds that the IRS may or may not actively enforce the mandate. According to her article, it all depends on the manner in which they decide to pursue collection of the penalty assessed for remaining uninsured. This penalty starts out low ($95 in the first year) and rises steadily after that capping out at 2.5% of annual income or something like $650 (whichever is greater). It’s not politically palatable to aggressively collect the fine, but there are clever ways to go about it. If they don’t collect the penalty, though, the mandate becomes pretty meaningless. And, according to this interpretation of the law, the enforcement provisions are pretty toothless in their current state.

But let’s say they do make a point of enforcing the penalty–and by extension the mandate–what will that require? Well, according to Newt Gingrich, “One of the things in the health bill is 16,000 additional IRS agents.” Others in the GOP are echoing this talking point precisely because it invokes fear and anger. People–especially people opposed to health reform–are likely to belong to one or both of two camps: those who oppose larger government and those who have money that they don’t want being taxed. So, saying that there will be 16,000 additional IRS agents to enforce the individual mandate is an effective way of rallying people against the idea by angering them over the notion of a growing bureaucracy and scaring them with the idea of audits and increased taxation. There’s just one catch: Gingrich’s estimate is quite bogus. If you want the full explanation, the good people over at have it for you. If you just want to see Ezra Klein dismantle Gingrich’s statement, read this.

The bottom line? There will be administrative costs associated with the implementation of health reform, but these costs will be primarily to make sure that the people and small businesses who need subsidies–in the form of tax credits–to be able to afford health insurance, will be able to get the help they need. Moreover, these administrative costs represent a very small portion of the total costs of the legislation (between 0.5% and 1% of the total 10-year costs) and would be dwarfed by the savings realized in the more efficient health care system reform will begin to produce. If none of that sounds as terrifying as “16,000 new IRS agents” then perhaps you’re beginning to see why politicians rely so heavily on rhetoric and so loosely on the truth.

1 Comment

Posted by on April 19, 2010 in Uncategorized


One response to “Enforcing the Individual Mandate

  1. Jan Baer

    April 20, 2010 at 8:44 pm

    Even if the mandate truly did require 16,000 new IRS agents, I'm not so sure that would be such a bad thing. The federal government is one of the nation's largest employers, and job-creation isn't exactly booming right now in other areas.


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