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The Individual Mandate Won't Work

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The individual health care mandate won't work.

As almost every American today knows, the individual mandate is a central feature of the health care law recently upheld by the Supreme Court. The mandate requires most Americans to carry "minimum essential" health care coverage. President Obama and the law's supporters claim that this measure will radically reduce the number of uninsured Americans.

It won't.

Even before the Court's decision, the Obama Administration projected that 4 million Americans would pay the penalty tax of the new law, rather than acquire health insurance. In the wake of the Supreme Court's decision, it is clear that the health care mandate will not increase insurance coverage by anywhere near the numbers forecasted by President Obama. There are three reasons the individual mandate won't work as touted.

First, many uninsured Americans will pay the tax rather than purchase health care insurance because the tax will be substantially less than the premiums they would have to pay for insurance. Indeed, the Court's opinion, written by Chief Justice Roberts, is virtually an invitation to Americans to pay the cheaper tax rather than the more expensive premiums for insurance coverage.

In the words of the Chief Justice: "Under the mandate, if an individual does not maintain health insurance, the only consequence is that he must make an additional payment to the IRS when he pays his taxes." And, the Chief Justice further notes, "for most Americans the amount due will be far less than the price of insurance." Thus, in a highly public way, the nation's highest judge legitimated the choice of paying the tax rather than buying insurance.

The second reason the mandate will fail is that, even when Americans eschew insurance coverage, the IRS has limited authority to enforce the resulting tax. Congress' misgivings about the mandate were so great that, when it passed the law, it specifically prohibited the IRS from proceeding against taxpayers' assets if they refuse to pay the tax. The IRS can withhold the mandate tax from a taxpayer's refund. If, however, there is no such refund, the IRS is powerless to enforce the tax.

Thus, many Americans will neither purchase insurance nor pay the tax -- and nothing will happen to them.

In theory, Congress could give the IRS full authority to enforce the individual mandate tax. In practice, this is unlikely.

If stronger IRS enforcement authority is unlikely, the third reason the mandate will fail is that enforcement of the mandate by other government agencies is permanently off the table as a result of the Court's decision. That decision, while sustaining the individual mandate as a constitutional exercise of Congress's taxing power, rejected the mandate as an exercise of Congress's authority under the Commerce Clause. Under the Constitution, the Commerce Clause is the national legislature's prime source of regulatory authority.

Suppose, for example, that a future Congress, more supportive of the individual mandate than is the current Congress, decides on stronger enforcement of the mandate through federal criminal law. Suppose, for example, that this future Congress wants to declare the willful failure to obtain insurance a federal misdemeanor.

Under the Court's decision, this future Congress could not proceed in this fashion since such a criminal law would be an exercise of the Commerce Clause power and the Court has held that the mandate is not a valid exercise of that power.

At the end of the day, the individual mandate will disappoint its proponents as many Americans will pay the tax rather than obtain insurance -- and many Americans won't even bother paying the tax because they will face no consequences from nonpayment. Future generations will look back on us and wonder what the fuss was about.

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