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The individual mandate still stands on Trump's first Tax Day

How President Trump is already affecting the individual mandate.

Photo by Robert Barnes/Contributor/Getty Images
Dylan Scott covers health care for Vox. He has reported on health policy for more than 10 years, writing for Governing magazine, Talking Points Memo and STAT before joining Vox in 2017.

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Republicans hate Obamacare's individual mandate, which requires Americans who don't have health insurance to pay a penalty. So do most Americans. But now it's the Trump administration's obligation to enforce it.

Today, Tax Day, is when that bill comes due. (Let's take a moment to remember Chief Justice John Roberts, who upheld the penalty as a tax in the 2012 Supreme Court case challenging Obamacare.)

2017 was supposed to be an important year for the mandate. The IRS was set to start rejecting tax returns from people who didn't fill in the sections about health coverage.

But the Trump administration, in the tradition of Republicans railing against the mandate, changed course and ordered federal agencies to lighten the administrative burden of Obamacare. So the IRS now says it will not reject tax returns just because they don't include information about health coverage.

So what does this mean, really?

Like it or not, Obamacare's individual mandate helps make the law work. Everybody, even young and healthy people, needs to buy insurance — if they don't, but a lot of sick people do, costs could spiral out of control.

So any action that appears to weaken the enforcement of the mandate makes health policy wonks and health insurers nervous. If people don't sign up because they aren't worried about paying the penalty, the markets could struggle.

"It potentially sends a signal of how the Trump administration plans to approach the individual mandate and other rules, which could influence how willing insurers are to participate going forward," Larry Levitt at the Kaiser Family Foundation told me.

But let's get one thing straight: Just because the IRS won't reject your tax return doesn't mean it won't come calling to collect on a mandate penalty later.

Garrett Fenton, a tax lawyer at Miller & Chevalier here in Washington, was clear about that.

"Nobody is safe, for lack of a better phrase, in thinking the IRS isn't going to come after them," he told me.

The Trump administration is just preserving a status quo that the Obama administration had established. Now, would the IRS really devote a lot of time to collect the $695 penalty, given everything else the agency has to do and considering many people are exempt if they can't pay?

That's a little less clear.

"They haven’t really given any indication [of] what they’re going to do in terms of devoting resources to enforcing the ACA, including the individual mandate," Fenton said.

It's worth remembering the mandate has always been weaker than many experts believe is necessary. The IRS can't, for example, take out a lien on your house if you fail to pay. Politically, it's obvious why that idea wouldn't fly. But that does make it harder to stop people from ignoring the mandate altogether.

There is one last wrinkle, though, that counteracts all this and helps strengthen the mandate — and might affect that tax refund you were expecting today: The IRS can deduct the penalty, if you owe one, from your refund. So you won't have to pay it out of pocket, but the government is still getting what it's owed.

That wrinkle might explain why the IRS told Congress 6.5 million taxpayers paid the mandate penalty on last year's taxes, a number I thought sounded high. Yes, it's the law — but given the lax enforcement, are people really signing up to pay more taxes?

Well, it turns out that if you thought you were getting a big refund, it's out of your hands.

Chart of the Day

Center on Budget and Policy Priorities

At least one insurer is seeing better business under Obamacare. The law's individual insurance markets could use some good news. Numbers from Blue Cross Blue Shield, indicating a better return on last year's plans, are a positive sign. Read more from the left-leaning Center on Budget and Policy Priorities.

Kliff's Notes

With research help from Caitlin Davis

  • "Rep. Jeff Denham says he's a 'no' on Republican healthcare legislation for now": “Rep. Jeff Denham (R-Turlock) said Monday night that he wouldn't support his party's healthcare legislation unless it left significant parts of Obamacare intact. ‘I've expressed to leadership that I'm a "no" on the healthcare vote until it is responsive to my community,’ he said during a town hall meeting with hundreds of voters in his district. ‘There are things in the Affordable Care Act we expect to stay,’ Denham added, such as coverage for pre-existing conditions and expanded Medicaid coverage.” —Chris Megerian, Los Angeles Times
  • "Insurers meet with Trump official to press for ObamaCare payments": “Health insurance executives met with a top Trump administration health official on Tuesday to press for the continuation of key ObamaCare payments. In the meeting with insurers, Seema Verma, the administrator of the Centers for Medicare and Medicaid Services, did not make any commitments on continuing the payments, sources said. She added that the insurers should also speak to Congress about the issue.” —Peter Sullivan, the Hill
  • "Study: Despite coverage expansions, mental health treatment lags": “Access to mental health providers and medication has dropped, a new study says, although federal lawmakers have enacted legislation in recent years to bolster private and public coverage of mental health treatment. The findings were assembled by researchers from New York University's Langone Medical Center, who published details of their report online Monday in the journal Psychiatric Services.” —Kimberly Leonard, Washington Examiner