The Corner

To Shrink the IRS, Repeal Obamacare’s Individual and Employer Mandates

One of the many troubling features of Obamacare is that it dramatically expands the reach and scope of the IRS. Two provisions in particular — the individual mandate, requiring people to buy health insurance; and the employer mandate, requiring employers to cover their workers — require substantial new enforcement powers for the IRS. I explain why in a new post for my Forbes blog: Basically, the IRS needs to know the specific insurance policy you’ve obtained, whether on your own or through your employer. The law also has the effect of forcing employers to make you disclose your household income to them. As I write:

To enforce the individual mandate, the IRS needs to know whether or not you have purchased insurance this year. It will also need to know the specific insurance policy you have, in order to ensure that it meets Obamacare’s “minimum essential coverage” requirement.

To enforce the employer mandate, the IRS needs the same information from employers in terms of the specific policies employers purchase for their workers, and also the hours worked by every part-time employee. In addition, your employer will need to know what your household income is, in order to ensure that the coverage it offers you is “affordable” to you by the law’s definition.

Some conservatives are raising the alarm: can a politicized IRS handle these duties in a non-partisan way? Or will your health records get leaked by the agency? Indeed, the IRS is subject to a class-action lawsuit in California, alleging that the IRS has improperly obtained personal medical records for 10 million individuals in that state, without a warrant.

Others are suggesting that the duty to enforce the individual and employer mandates be taken out of IRS’ hands and moved into another agency. But, to me, this doesn’t make much sense. Do we really want another government agency to have sensitive information about our incomes and our insurance policies?

The only viable solution to this problem is to repeal the employer mandate altogether, and to replace the individual mandate with something else, like a limited open enrollment period, that does not require expanding the power and the authority of the IRS.

Repealing the employer mandate will give employers additional incentive to dump workers onto Obamacare’s exchanges. But, in my view, this is on balance a good thing, because it will mean that individuals can shop for insurance themselves, something that economists of all stripes support.

The only real solution is to repeal both mandates. There are policy ramifications for doing so, as I discuss in the post, but overall the benefits far outweigh the costs.

Avik Roy — Avik Roy is the President of the Foundation for Research on Equal Opportunity (FREOPP.org), a non-partisan, non-profit think tank.

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