The Blog

Capretta's Must-Read Congressional Testimony

10:00 AM, Jul 10, 2013 • By WILLIAM KRISTOL
Widget tooltip
Single Page Print Larger Text Smaller Text Alerts

The recent unilateral decisions by the administration will have significant budgetary consequences. In May of this year, CBO updated its estimates of the PPACA insurance coverage provisions and projected that the employer mandate would generate $10 billion in employer payments in fiscal year 2014 and $140 billion over the coming decade. At a minimum, the administration’s decision has jeopardized the $10 billion assumed to be collected in 2014. It is also not unreasonable to doubt whether any of the planned $140 billion in ten-year collections will ever be received by the federal government given the loud and apparently accurate complaints by the employer community that the mandate, as currently written, is hopelessly and irreparably flawed and cannot easily be enforced.

Moreover, the administration’s decision to forgo income verification for some applicants for subsidies in the exchanges, as well as to forgo independent verification of employer-provided insurance status in some cases and rely instead on applicant attestations, raises many additional budgetary questions. Without a system in place as a check against erroneous payments, the costs of providing subsidies in the exchanges will almost certainly rise above what otherwise would have been spent. According to the Treasury Inspector General for Tax Administration, the federal government paid out up to $13.6 billion in erroneous Earned Income Tax Credit (EITC) payments in 2012, and that’s with extensive electronic data systems in place aimed at reducing waste in the program. The recent announcement from the Obama administration that only the “honor system” will be in place in some cases opens up the federal treasury to potentially very substantial erroneous payments in a program that is arguably even more complex and harder to administer than the EITC.

It is true that any excessive payments can, in theory, be collected back later. But much of that collection system is based on income tax filing, and many of these applicants do not file income tax forms each year. Moreover, previous experience indicates that it is very difficult, if not impossible, for the federal government to recoup overpayments made to low and moderate-income households once the subsidy payment has already been made.


The administration’s recent decisions to delay significant parts of the PPACA are an invitation to the Congress to revisit the law too.

At this point, it would seem that there is bipartisan agreement that the employer mandate should not go into effect -- at least not before 2015. This committee and Congress should consider enacting into law the one-year delay that the administration already says it supports. This would allow Congress to write the delay in a manner that clearly relieves employers of their obligations. It would allow Congress to revisit the question again next year. The same reasons that compelled the administration to delay its enforcement this year will be there next year, with possibly the same result.

And if the employer mandate is going to be delayed, it would seem only fair that the individual mandate be delayed as well. Why should large companies be relieved of responsibilities but not workers? The administration’s delay of the employer mandate may mean that some workers will not get an offer of insurance at their place of employment, even as the exchanges in some states will be barely operational and offer very few insurance options (and in at least one case, only one option). Is it fair to threaten tax penalties on the uninsured under these circumstances? Moreover, if employers and insurers are not required to submit 2014 insurance enrollment information to the federal government, how can the individual mandate be enforced fairly anyway? It only makes sense for Congress to couple the employer mandate delay with a delay in the individual mandate too.

It also becoming increasingly clear that the exchanges being planned for October carry with them the risk of significant waste in taxpayer funds. A process that relies in some cases on self-reporting will predictably result in billions of dollars in erroneous payments. Therefore, this committee should seriously consider legislation that couples delays in the employer and individual mandates with a simultaneous delay in the entire exchange roll-out. This would give the administration more time to prove that the data systems it has been promising and working on for three years are actually in place, tested, and ready to work without risks to taxpayers.

Recent Blog Posts

The Weekly Standard Archives

Browse 19 Years of the Weekly Standard

Old covers