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2015 Is the Year of the Mandate

by from Washington Examiner, January 5, 2015

No aspect of President Obama’s healthcare law is more contentious than the requirement that individuals purchase health insurance the government deems acceptable or pay a penalty.

Obama himself originally opposed the individual mandate in his 2008 primary fight during the Democratic National Convention, before embracing it as president. The provision was one vote away from being wiped out by the U.S. Supreme Court, a decision that could have taken the rest of the law down with it. It still remains highly unpopular — with 64 percent of Americans having an unfavorable view of the provision, according to a December tracking poll by the Kaiser Family Foundation.

Yet for all its fame and for all the antagonism it has caused, Americans haven’t had much actual interaction with the mandate. That will change when they file their taxes in 2015.

Though the requirement to purchase insurance began in 2014, most Americans will file their 2014 taxes this year, meaning 2015 is the year most people will start to feel the impact of the individual mandate.

When Americans go to file their taxes in 2015, they’ll have to take the extra step of demonstrating to the IRS that they maintained government-approved insurance coverage in 2014. If they do not meet the requirement, or fail to qualify for any of the exemptions from the mandate (such as claiming an income hardship), they will be forced to pay a penalty.

For the 2014 tax year, the penalties will be relatively modest, at $95, or 1 percent of income above the filing threshold, whichever is higher. The filing threshold is around $10,000, meaning a person earning $50,000 would be subject to a penalty of about $400.

In the 2015 tax year, that penalty will rise to 2 percent of adjusted income, or $325. By 2016, it will rise to 2.5 percent of income, or $695. So an uninsured American earning $50,000 would be subject to a penalty of about $1,000 in the 2016 tax year.

Even though the mandate won’t reach its peak for several years, the fact that Americans will be exposed to the mandate in a more tangible way this year will make it less abstract and provide an opening for the new Republican-controlled Senate.

As Americans become even more aware of the mandate when they file the taxes, Republicans can pass a bill to repeal it. Such a repeal isn’t likely to become law, but forcing Obama to veto it will reinforce his willingness to impose more government burdens on individuals for the sake of his healthcare scheme — helping Republicans make the case for why their nominee should take over the White House.

Along with Obama, insurance lobbyists will be fighting to keep the requirement that nearly every American purchase a comprehensive version of their product. This will provide Republicans an opportunity to demonstrate that they’re willing to take on powerful corporations on behalf of the little guy, while Democrats ally themselves with corporate lobbyists.

When Obamacare was being debated, some liberals opposed the idea of mandating that individuals purchase private insurance coverage and letting hundreds of billions of dollars in federal subsidies flow through the federal government rather then just moving to a fully government-run system. To these purists, the alliance between Democrats and big insurance companies is still unseemly.

It is true that given Obamacare’s design, repealing the individual mandate in isolation without undoing other aspects of the law would disrupt the market to the extent that it exists. That’s why, ultimately, Republicans will have to coalesce around a broader alternative approach to reforming the nation’s healthcare system.

© 2015 by the Washington Examiner. Reprinted with permission.