The Individual Mandate Is The Worst Tax Ever It doesn’t even further the ACA’s core goal of helping people with pre-existing conditions get coverage. By Chris Pope
https://www.wsj.com/articles/the-individual-mandate-is-the-worst-tax-ever-1510521324
If you were deliberately trying to design the most arbitrary, painful and pointless tax possible, how would you go about it?
First, you would structure it to inflate the cost of an essential product. Then, you’d create exemptions so vast that only 5% of taxpayers were subject to it. You might even ensure that it hit people only when they were particularly vulnerable—like when they’d lost a job. Finally, you would use it to drive enrollment in entitlements, so that it increased the federal deficit by $338 billion.
In short, you would design something that looks very much like the Affordable Care Act’s individual mandate.
Sen. Tom Cotton (R., Ark.) has made headlines by suggesting that tax reform should include a repeal of the mandate—an annual tax of between $695 and $13,380 imposed on 6.5 million American households. In defense of the mandate, ObamaCare’s defenders have resorted to hyperbole and scare-mongering, probably because the penalty is so difficult to justify on the merits.
In most insurance markets, people seek coverage in proportion to the risk they expect to face, and insurers receive payment in proportion to the cost they expect to cover. This approach prevailed for nongroup health insurance in most states prior to ObamaCare. It produced stable markets with premiums of less than half what currently prevails on the exchanges, but often failed to ensure affordable coverage for individuals with major chronic conditions.
The ACA has reversed this situation, providing affordable coverage to individuals with pre-existing conditions, but yielding plans that are priced well above the needs of most Americans. The average annual premium was $5,712 in 2016, while median health-care spending was only $709 in 2014.
The individual mandate was intended to prevent the bulk of individuals from fleeing this unappealing arrangement. Its advocates have argued that the mandate reduces premiums on the exchanges, but this is only true to the extent that it pushes more cost-effective alternatives out of reach.
As a newly released Manhattan Institute Issue Brief demonstrates, the mandate is superfluous to the ACA’s core guarantee of affordable coverage for individuals with pre-existing conditions. In fact, it is subject to so many exemptions that recent studies have failed to discern any impact of the mandate on the proportion of Americans who are uninsured.
The ACA’s guarantee of affordable insurance to low-income individuals and those with pre-existing conditions is due entirely to the law’s subsidy provisions. These expand automatically to whatever level insurers need in order to bring a plan to market, which limits premiums and out-of-pocket costs as a share of income. This principle holds regardless of the ratio of healthy to sick enrollees in the exchange.CONTINUE AT SITE
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