Indeed: The Employer Mandate: A Necessary Impossibility « Megan McArdle.
So a missing employer mandate creates problems, who would have thought such a thing…
This has, I pointed out, big fiscal implications: offering subsidies only to people who can’t get insurance through their employer saves the government a lot of money. Allowing people to apply for subsidies under the honor system, rather than actually verifying, probably means a lot of extra money going out the door–money which, I pointed out, turns out to be very difficult to get back if you realize later that you’ve paid too much. Under the new law, the IRS isn’t allowed to claw back overpayments or collect fines the way it normally does–slap a garnishment order on your paycheck, levy your bank accounts, and in extremis, seize your home or other assets. All they can do is take it out of any payments that they owe you.
But Yuval Levin, an ultrawonk who appears to have had the entire text of the PPACA tattooed on the inside of his eyelids for quick reference, emails to say that the government’s ability to recover overpayments is even more limited than I realize:
At which point I say “read the whole thing and jump to Megan’s conclusion…
….At this point, the IRS’ recovery abilities are so crippled that it would be folly to issue subsidies first and ask questions later.
And the subsidies have to be given up front; Folks making $50,000 a year cannot be mandated to buy a $1,000 a month insurance policy and told they’ll get their subsidy back at tax refund time.
But it’s starting to look like both of these things cannot happen, at least not in the near term. The alternatives are to delay the whole bill, or resign ourselves to hemorrhaging wads of cash. The IT expert’s instinct to hold things together with some inelegant intermediate kludge won’t work. All the elements of the law are so tightly coupled that pulling one out makes the whole machine go haywire.
Obviously, the preference of the law’s supporters is to hemorrhage cash. Just go ahead and hand out subsidies indiscriminately, the better to build political support to block repeal. But this seems . . . well, I’m struggling for kinder words, but I can’t find any. It seems wildly irresponsible. Not to mention a fundamental betrayal of the promises that were made to get the law passed in the first place.
Two predictions:
- Chaos
- Slow motion train wreck happening right in front of your eyes
