When it comes to health care, IRS should be IRX


Article Highlights

  • The scandal-plagued Internal Revenue Service is "overtaxed" in its new role as key enforcement agency for Obamacare

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  • If Obamacare cannot be implemented without putting a runaway executive branch agency on steroids, we need to delay

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  • More funding for the IRS will only toss more fuel on the raging fire engulfing Obamacare

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WASHINGTON — The scandal-plagued Internal Revenue Service is "overtaxed" in its new role as the key enforcement agency for Obamacare.

Congress should call a timeout on the IRS grab for more taxpayer funds to implement the sweeping mandates and information disclosures required by the Affordable Care Act. That means no extra revenue for the health insurance cops without clear and convincing evidence of reform that will curb their abusive practices.

On March 5, the Department of the Treasury's Inspector General for Tax Administration J. Russell George told a House committee, "It is unprecedented in recent history, the amount of responsibility the IRS is being given in an area that most people don't think of as an IRS function."

Noting that this new level of IRS involvement in health care will trigger a flood of questions, aggravate service problems and force trade-offs in use of limited resources, George observed, "They have to determine what enforcement mechanisms they'll employ ... how they go about determining who to audit and who not to."

Those are chilling words in light of this spring's revelations about how the IRS targeted certain political groups for harsh treatment when they sought tax exempt status - particularly when the current head of IRS efforts to implement and enforce Obamacare, Sarah Hall Ingram, previously was commissioner of the IRS Tax Exempt and Government Entities division when that round of discrimination started.

The IRS was assigned a massive role in implementing the ACA, involving more than a dozen new taxes or tax increases, 47 different statutory provisions, and coordination across many federal agencies.

Implementation costs were expected to reach more than $880 million through fiscal year 2013, and the IRS requested an additional $439 million in its FY 2014 budget submission to Congress.

While the IRS managed to spend about $50 million on conferences for employees between 2010 and 2012 - including line dancing practice by IRS attendees, and producing a Star Trek video parody - it is having trouble carrying out its list of ACA assignments.

On July 2, the aministration suspended until 2015 the enforcement of the employer mandate reporting requirements and penalties.

Several days later, it quietly announced that state-administered health exchanges would no longer need to verify the eligibility of individual applicants for insurance coverage tax subsidies.

An applicant's attestation about household income, and lack of "qualified" coverage offered by his or her employer, will be close enough for government work until 2015. With such an "honor system" policy in place, much of the envisioned IRS data matching and mandate enforcement will remain on pause control.

The above breakdowns in the ACA's unrealistically complex and contorted implementation schemes are the clearest signals yet that we can't get from here to there without seriously rethinking the law's goals, methods, and assumptions - particularly involving the IRS.

The short-term remedy is to keep the agency on its pre-ACA budget until its officials demonstrate a permanent commitment to reform of past abusive practices.

In the federal government, failure in achieving program goals too often is rewarded with more, rather than less, funding.

Given the potentially vast powers of the IRS under the ACA to intrude into sensitive information about income, employment, insurance coverage and personal health, any additional injections of taxpayer funds for such enhanced IRS enforcement should stop right here.

If Obamacare cannot be implemented without putting a runaway executive branch agency on steroids, we need to delay - or change - more ACA provisions than just the employer mandate and coverage eligibility verification.

The long-term remedy involves Congress limiting the IRS role to revenue collection, rather than health-care regulation and income redistribution. Then, it should rethink its overall approach to health reform. More funding for the IRS will only toss more fuel on the raging fire engulfing Obamacare.

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About the Author


Thomas P.
  • Thomas Miller is a former senior health economist for the Joint Economic Committee (JEC). He studies health care policy and regulation. A former trial attorney, journalist, and sports broadcaster, Mr. Miller is the co-author of Why ObamaCare Is Wrong For America (HarperCollins 2011) and heads AEI's "Beyond Repeal & Replace" health reform project. He has testified before Congress on issues including the uninsured, health care costs, Medicare prescription drug benefits, health insurance tax credits, genetic information, Social Security, and federal reinsurance of catastrophic events. While at the JEC, he organized a number of hearings that focused on reforms in private health care markets, such as information transparency and consumer-driven health care.
  • Phone: 202-862-5886
    Email: tmiller@aei.org
  • Assistant Info

    Name: Neil McCray
    Phone: 202-862-5826
    Email: Neil.McCray@aei.org

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