Enforcing the health “tax”: redux
(NOTE TO READERS: Last week, the blog carried a post that discussed potential difficulties in enforcing the new “tax” (or penalty) that Americans will have to pay to the federal government if they do not obtain health insurance by 2014 — assuming that the law remains on the books after this year’s election and Congress’s reaction. Because the federal health care law has often been compared to the pioneering state law adopted in Massachusetts, it is informative to check how residents of that state are complying with a similar mandate to get insured. Massachusetts officially calls its enforcement back-up a penalty, not a tax.)
The Internal Revenue Service is now contemplating how to draft tax forms to gather information at tax time about how Americans are obeying the mandate to obtain health insurance. If the IRS follows the lead of Massachusetts, federal taxpayers may not find the task of reporting to be quick and easy. It won’t be simply a matter of checking a single box on the tax return. But, easy or not, the way Massachusetts does it appears to be working. State officials report that “some 97 percent of the taxpayers are complying with new health reform filing requirements.”
Massachusetts officials, like IRS officials, depend upon taxpayers to fill out and submit their own tax returns. Under the Massachusetts law, taxpayers are supposed to get a form from a health insurance company (it has the same number, 1099, as the form that federal taxpayers get from sources of their income), and that form provides data about their insurance coverage — if they have it.
The state’s “Schedule HC,” for Health Care, is a three-page document, with an extra, blank page for doing some calculations. (The form can be viewed here.) It is a bit daunting, on first glance. The first page is the only one that a resident has to fill out, if that page shows that the taxpayer met the insurance requirement. Item 5 on that page tells the filer that, “if you had health insurance” that met state requirements, “you are not subject to a penalty. Skip the remainder of this schedule and continue completing your tax return.”
But, if a pair of small boxes at the top, one for the taxpayer and one for a spouse (if they are filing jointly) are each marked “None,” meaning the taxpayers did not have health insurance for the full year, then the filer must go on to the second and third pages of the document, which help in calculating the penalty that is due. At the bottom of each of the three pages, the filer is reminded to “complete and enclose schedule HC with your return” — that is, with one’s Massachusetts state tax return.
Each year, Massachusetts officials who run the state health insurance program put out a “progress report.” The report for last year can be read here.
Among the contents of that report, it declares that “The individual mandate has worked fairly and effectively to expand coverage in Massachusetts. Some 97% of the taxpayers are complying with new health reform filing requirements.”
But the report also shows that the Massachusetts system — which, like the federal Affordable Care Act, sought to achieve near-universal health insurance coverage — seems to be right at that goal. “Massachusetts,” it says, “now has a 98% coverage rate, the best in the nation, by far. More than 400,000 Massachusetts residents are newly insured. Nearly all children (99.8%) and seniors (99.6%) have health insurance.”
And, in a passing reference to how heated the debate has been over the federal law, the report comments: “Even in the midst of a polarizing debate over national health care reform, strong public and bipartisan support has been sustained” for the Massachusetts version. It says that independent polls show support for it “ranging from 59% to 75%.”
(The blog thanks a Massachusetts resident and blog reader who has to fill out the form; that is our source for links to the document, and to the state’s 2011 report.)
Recommended Citation: Lyle Denniston, Enforcing the health “tax”: redux, SCOTUSblog (Jul. 9, 2012, 4:30 PM), http://www.scotusblog.com/2012/07/enforcing-the-health-tax-redux/