It doesn’t even further the ACA’s core goal of helping people with pre-existing conditions get coverage.
If you were deliberately trying to design the most arbitrary, painful and pointless tax possible, how would you go about it?
The mandate is superfluous to the ACA’s core guarantee of affordable coverage for individuals with pre-existing conditions.
First, you would structure it to inflate the cost of an essential product. Then, you’d create exemptions so vast that only 5% of taxpayers were subject to it. You might even ensure that it hit people only when they were particularly vulnerable—like when they’d lost a job. Finally, you would use it to drive enrollment in entitlements, so that it increased the federal deficit by $338 billion.
In short, you would design something that looks very much like the Affordable Care Act’s individual mandate.
Sen. Tom Cotton (R., Ark.) has made headlines by suggesting that tax reform should include a repeal of the mandate—an annual tax of between $695 and $13,380 imposed on 6.5 million American households. In defense of the mandate, ObamaCare’s defenders have resorted to hyperbole and scare-mongering, probably because the penalty is so difficult to justify on the merits.
In most insurance markets, people seek coverage in proportion to the risk they expect to face, and insurers receive payment in proportion to the cost they expect to cover. This approach prevailed for nongroup health insurance in most states prior to ObamaCare. It produced stable markets with premiums of less than half what currently prevails on the exchanges, but often failed to ensure affordable coverage for individuals with major chronic conditions.