Congress Moves to Stop I.R.S. From Enforcing Health Law Mandate

Posted on July 6, 2017

The New York Times

By ROBERT PEAR
JULY 3, 2017

WASHINGTON — Congress is moving to prevent the Internal Revenue Service from enforcing one of the more unpopular provisions of the Affordable Care Act, which requires most Americans to have health insurance or pay a tax penalty.

The plan is separate from Republican efforts to repeal the health care law, and appears more likely to be adopted because it would be written into the annual spending bill for the Treasury and the I.R.S.

But it has a similar purpose: to weaken the health law that President Trump and Republicans in Congress want to dismantle.

Congress has been working for months on a bill to repeal President Barack Obama’s health care law, including the coverage requirement. That provision, known as the individual mandate, is widely disliked, according to opinion polls.

In case that effort fails or bogs down, the House Committee on Appropriations has drafted a provision to stop the I.R.S. from enforcing the mandate. The restrictions, for the fiscal year that starts Oct. 1, are included in an appropriations bill that was approved on Thursday by the Subcommittee on Financial Services and General Government.

“None of the funds made available by this act may be used by the Internal Revenue Service to implement or enforce section 5000A of the Internal Revenue Code,” which imposes the tax penalty on people who go without insurance, the bill says.

The bill would also prohibit the I.R.S. from enforcing a requirement that employers and insurance companies inform the government of the name and Social Security number of anyone to whom they provide health insurance coverage. The government uses these reports to help administer the individual mandate and other requirements.

Representative Tom Graves, Republican of Georgia and chairman of the subcommittee, said the panel had produced “a very conservative bill that aligns closely with President Trump’s budget.” He said the bill would hold the budget of the I.R.S. “below the 2008 level” while providing money to improve its customer service and cybersecurity.

Garrett Hawkins, a spokesman for Mr. Graves, explained the reason for the restrictions by saying, “While Congress works to pass President Trump’s health care plan, stopping the I.R.S. from implementing the harmful individual mandate helps provide relief for the families suffering under Obamacare.”

The penalty for failing to maintain coverage is either a flat dollar amount or a specified percentage of household income, whichever is greater. For an individual with annual income of $40,000 and no coverage during the year, the penalty would be $741, according to a calculator on the I.R.S. website. For a couple with annual income of $90,000 and no insurance, the penalty would be $1,732.

Employers and insurers are supposed to file “information returns” identifying each person to whom they provide coverage. If they fail to do so, they too may be subject to penalties.

Aides to the Senate majority leader, Mitch McConnell, Republican of Kentucky, were working Monday on his bill to repeal major provisions of the Affordable Care Act, with the hope that they could meet objections from about one-fifth of his 52-member caucus. He has sent proposed revisions to the Congressional Budget Office for analysis.

To mollify moderate Republicans, he is considering restoring some money to Medicaid or keeping a tax on the investment income of the most affluent Americans. To satisfy conservatives, he is considering a proposal that would allow insurers to sidestep most federal insurance rules if they offer at least one health plan that complies with those standards.

Republicans in the Senate and the House generally agree on one thing: “The individual mandate has no place in a free society,” in the words of Representative Michael C. Burgess, Republican of Texas and a physician.

Many supporters of the Affordable Care Act, including Democrats in Congress, describe the individual mandate as an important part of the law. The law itself said the mandate would increase the number of healthy people buying insurance. Their premium payments help defray the cost of care for less healthy people and thus lower premiums in general, Congress said in 2010.

Using similar logic, the Congressional Budget Office said last week that repealing the individual mandate penalty, by itself, could lead to higher premiums. And many insurers cite uncertainty about the mandate as a reason for seeking rate increases for 2018.

The Obama administration went to the Supreme Court in a successful effort to defend the individual mandate, but the Trump administration has indicated that it is not planning aggressive enforcement. On his first day in office, Mr. Trump told agencies to use their discretion, “to the maximum extent permitted by law,” to waive or grant exemptions from any fee, tax or penalty imposed by the Affordable Care Act.

Less than a month later the I.R.S. said it would accept tax returns from people who did not provide the requested information about whether they had coverage. The agency had planned to reject such returns.

The I.R.S. commissioner, John A. Koskinen, said that 6.5 million taxpayers reported paying a total of $3 billion in penalties for not having coverage in 2015. In addition, 12.7 million taxpayers claimed exemptions from the coverage requirement, on account of hardship or other factors. And more than four million people filed “silent returns,” not paying a penalty, not indicating if they had coverage and not claiming an exemption.