A critic of the Affordable Care Act says the ACA individual coverage mandate works especially poorly and ought to be replaced.
Thomas Miller, a senior fellow at the Washington-based American Enterprise Institute, talked about alternatives to the mandate today in Washington during a hearing organized by the House Ways & Means oversight subcommittee. The subcommittee streamed the hearing live on the web.
Drafters of the Patient Protection and Affordable Care Act of 2010, one of the two laws in the ACA package, included the penalty provision in an effort to increase the number of relatively young, healthy people who pay for major medical coverage. The coverage mandate, officially known as the individual shared responsibility provision, was supposed to increase health insurer revenue, and decrease the average level of claims per enrollee.
For the people affected, the tax amounted to 1 percent of modified adjusted gross income for 2014, 2 percent of MAGI for 2015, and 2.5 percent of MAGI for 2016.
In the real world, the average individual mandate penalty paid increased to $452 for 2015, from $204 for 2014, according to a National Taxpayer Advocate report.
Miller testified at the hearing that the mandate is the most unpopular well-known ACA provision. Only 35 percent of the U.S. adults who participated in the Kaiser Health Tracking Poll in November approve of the individual mandate, he said.
Congress itself has responded to the unpopularity of the mandate, and members’ own qualms about the mandate, by limiting who has to pay the mandate, and how the Internal Revenue Service can enforce the mandate, Miller said.
Congress created exemptions for illegal immigrants, foreign nationals, people with religious exemptions, and people who find coverage unaffordable, and regulators later added exemptions for people with excuses such as the recent death of a family member, or facing evictions, Miller said.
The IRS can deduct the penalties owed from tax refunds, but it cannot impose other penalties or prosecute non-payers in criminal court, and it cannot use liens to collect unpaid penalties, Miller said.
Jonathan Gruber, an economist who supports the ACA, found that the penalty had little effect on the number of people with coverage in 2014, Miller said.
Gruber found that the ACA Medicaid coverage expansion program and the ACA exchange plan premium subsidy program accounted for most of the coverage gains, Miller added.
Miller suggested six possible ACA individual mandate alternatives.
ACA individual mandate alternatives
1. Expand the Health Insurance Portability and Accountability Act provision, which once helped people who maintained “continuous coverage” get access to health insurance.
The 1996 provision applied only to people who had group health coverage and certain other types of coverage, not users of individual major medical policies. But it was supposed to guarantee that the people who met HIPAA continuous coverage requirements could get some kind of replacement coverage.