A Toxic Combination
Obamacare meets the IRS
Jun 3, 2013, Vol. 18, No. 36 • By JEFFREY H. ANDERSON
Of all the scandals in his administration that President Obama knows nothing about, the one Americans find most appalling is the decision by the Internal Revenue Service to target the president’s political adversaries. What’s more, as subsequent congressional testimony has made clear, the IRS isn’t particularly repentant about its actions.
One thing Republicans and Democrats should therefore be able to agree on is that this is no time to significantly expand the IRS’s power. Yet that is exactly what will happen under Obamacare if no action is taken. A simple proposal: Remove the IRS from any role in implementing or enforcing Obamacare. It would be hard to argue at this juncture that the IRS is up to the job.
Such legislation has been introduced by Sen. John Cornyn (R.-Texas) and Rep. Tom Price (R.-Ga.). Price, a doctor, sensibly writes, “When it comes to . . . health care decisions, no American should be required to answer to the IRS—an agency that just forfeited its claim to a reputation of impartiality.”
Under Obamacare, the IRS is set to acquire expansive new powers. A Treasury Department audit concludes that, of the “over 500 provisions” of Obamacare, nearly a tenth involve the IRS. The Treasury audit reads, “Implementation of [Obamacare] presents a major challenge to the IRS as [it] represents the largest set of tax law changes in more than 20 years and affects millions of taxpayers.” As Treasury inspector general J. Russell George put it, “The IRS must ensure that all the information needed to accurately and effectively administer these provisions is provided by employers, insurers, and taxpayers,” so as “to manage the burden placed on employers, insurers, and taxpayers who must comply with the various [Obamacare] requirements.”
How impartially will the IRS do its job? According to the plain language of the Obamacare legislation, its taxpayer-funded subsidies (approaching $1 trillion over the next decade) can only flow into its state-established exchanges, not its federally established ones. The Congressional Research Service says that “this language seems to be straightforward on its face.”
But instead of simply enforcing the law as written, the IRS has obsequiously deferred to the position expressed in other quarters of the Obama administration: that the textual language isn’t binding. After all, only 17 states opted to run their own exchanges. Accordingly, the IRS has ruled that federally established exchanges will get the money as well. (Legal challenges are proceeding.)
Meanwhile, to exercise its newfound powers under Obamacare, the IRS has requested $440 million and 1,954 additional full-time equivalent employees for fiscal year 2014. That’s just for its Obamacare operations. Viewed in a certain light, this seems a reasonable request—for the taxman will be busy. According to the Congressional Budget Office, the loot that the IRS will be responsible for collecting over the 10-year span from 2014 to 2023 will total $1.2 trillion. That tally is solely for Obamacare taxes and penalties.
This total includes penalties on Americans who refuse to purchase federally approved health insurance. (Thanks to last year’s decree by Health and Human Services secretary Kathleen Sebelius, such insurance must include “free” coverage of birth control, sterilization, and the abortion drug ella, but not “free” heart medicine, cancer treatments, and the like.) It also includes penalties on businesses and charities that refuse to offer such federally approved insurance, as well as taxes on high-premium insurance plans, taxes on hospital insurance, and taxes on medical equipment.
Under Obamacare, however, the IRS will move beyond the realm of simple tax collection. To quote from the Treasury audit:
So the judge of whether hospitals are meeting community needs will be the IRS. What could possibly go wrong? (On the heels of Sebelius’s earlier decrees, one wonders how the IRS will treat Catholic hospitals.)
The Treasury audit also notes that the IRS will be responsible for ensuring “that tax credits for cellulosic biofuel are not allowed for fuels with significant water, sediment, or ash content.” Yes, that’s covered by Section 1408 of Obama-care. (Not for nothing is it 2,700 pages long.)
Obamacare will require workers—against the established norms in this country—to divulge their entire household income to their employers. It will also require all citizens to divulge specifics about their health insurance to the IRS. The IRS will need to know what kind of insurance you have, and it will need to know what it covers. Only then will it be able to decide whether to penalize you.
Moreover, Obamacare will require Americans to update the IRS regularly on what’s going on in their lives. Marriages, divorces, job changes, moves, pay raises, even changes in numbers of hours worked—these are all things on which the IRS will expect to be kept well informed. During congressional testimony last summer, Rep. Tim Walberg (R.-Mich.) asked IRS official Nina Olson, “Do you believe that most Americans are going to update the IRS or state exchanges when they change jobs, get married, move states, whatever?” “I think it’s going to be a very great learning curve,” Olson replied. “I think it will be a surprise to taxpayers if they don’t update their information.”
As it collects data on potential violators of Obamacare’s coercive mandates, the IRS will be aided by the creation of a new Federal Data Services Hub, which will allow information to be collected and shared between the Department of Health and Human Services, the Department of Justice, the Department of Homeland Security, the Social Security Administration, the several states, and the IRS. As if enough privacy concerns weren’t raised by this, HHS has contracted with a private company—Quality Software Services, Inc., a subsidiary of UnitedHealth Group—to help build and police Obamacare’s exchanges. So it won’t just be government entities that have access to Americans’ sensitive data.
And who will be the director of the IRS’s Obamacare office? None other than Sarah Hall Ingram, who has lately been in the news for her work running the IRS office responsible for tax-exempt organizations between 2009 and 2012, ground zero for the IRS’s heavy-handed treatment of Tea Party organizations.
As detailed in the Treasury audit, the IRS National Headquarters Affordable Care Act Office isn’t really just one office. It actually comprises three program management offices (PMOs), four executive steering committees (ESCs), and various “Services and Enforcement Exchange Working Teams.” The four functional ESCs and the working teams will report to the PMOs, which in turn will report to the IRS ACA executive steering committee. No doubt President Obama and his subordinates will keep close tabs on the actions of these entities and hold them accountable long before the press uncovers any misdoings. But, just in case, it might be helpful to keep this organizational map handy in the event the IRS comes asking about your health care.
The only way out of this mess—short of full repeal, which will have to wait until a Republican presidential candidate advances a meaningful alternative, makes that the centerpiece of his campaign, and wins the presidency—is to eliminate the IRS’s role in implementing and enforcing Obamacare. Whatever thoughts most Americans might have about the appropriate way to provide medical care, they presumably center on their doctor, not the taxman. On both sides of the aisle, it’s time for Congress to show similar reasonableness—and disentangle the IRS from our health care system.
Jeffrey H. Anderson is executive director of the newly formed 2017 Project, which is working to advance a conservative reform agenda.
Recent Blog Posts