Next stop on the Obamacare train wreck: Revenge and Fraud


Last Tuesday, the Obama Administration announced it was delaying the employer mandate. On Friday, it announced it was delaying other requirements in Obamacare:

The Obama administration announced Friday that it would significantly scale back the health law’s requirements that new insurance marketplaces verify consumers’ income and health insurance status.

Instead, the federal government will rely more heavily on consumers’ self-reported information until 2015, when it plans to have stronger verification systems in place.

The implications of this decision are tremendous. Tea Party Patriots’ Legislative Coordinator, Bill Pascoe, explained the three most important:

First, the Administration is going to rely on self-reported information in the 16 states (and the District of Columbia) that are setting up the Obamacare health exchanges. The other states will face an audit:

The federal government will, however, conduct an audit for the states where it is managing the new insurance Web portal.

As Bill succinctly stated, this is payback by the federal government. Simply put, it is rewarding its friends and punishing its enemies.

The second critical aspect is the probable level of fraud that will be seen. From the linked article above:

The rule also scaled back states’ responsibilities to double-check the income levels that consumers report, which determine any tax subsidy they receive.

While initial regulations had proposed an audit of each consumer who reported an income significantly lower than what federal records indicated, the final rule scaled that back to an audit of a statistically significant sample of such cases.

For individuals who are not part of that sample, “the Exchange may accept the attestation of projected annual household income without further verification,” it said.

Self-reporting to receive subsidies – you couldn’t encourage dishonest behavior more if you tried. But don’t worry – the Administration will punish lawbreakers, if it can somehow figure out if you are lying (by comparing self-reported income to what you report to the IRS):

In addition, lying on the exchange form carries with it a penalty of as much as $25,000. An individual who fibbed on his income would also have to pay back the extra subsidies when filing a tax return for 2014.

Sounds like a lot of responsibility for a law that one quoted health care expert says the government is in “triage mode” on.

The third implication is probably clear by now: once people are on the subsidies, regardless of their dishonesty or actual need for such subsidies, the federal government is going to shrug and say, “Well, let’s keep them on, anyway.” This creates a fait accompli for the Administration, as once people are on government programs, it is incredibly difficult to get them off. As Mark Steyn wrote in a must-read column in 2010, just before Obamacare became law:

Why is he doing this? Why let “health” “care” “reform” stagger on like the rotting husk in a low-grade creature feature who refuses to stay dead no matter how many stakes you pound through his chest?

Because it’s worth it. Big time. I’ve been saying in this space for two years that the governmentalization of health care is the fastest way to a permanent left-of-center political culture. It redefines the relationship between the citizen and the state in fundamental ways that make limited government all but impossible. In most of the rest of the Western world, there are still nominally “conservative” parties, and they even win elections occasionally, but not to any great effect (Let’s not forget that Jacques Chirac was, in French terms, a “conservative”).

The result is a kind of two-party one-party state: Right-of-center parties will once in a while be in office, but never in power, merely presiding over vast left-wing bureaucracies that cruise on regardless.

America has already been on this path for decades. Ethanol subsidies, Social Security, Medicare, Medicaid, sugar subsidies, the mortgage interest deduction and other tax loopholes and credits, the 2007 “temporary” student loan interest rate deduction – all of this was put into place by centralized government, and too little of it is open to change.

The Administration’s Friday announcement is good insofar as it shows the federal government is truly scrambling to set up the law. But it is very bad in that it sets up payback against the Administration’s state-based opponents, virtually guarantees high levels of fraud, and sets the stage for repeal of Obamacare to be an assault on the shrinking middle class.