Preface: In the interest of breaking through the current 'Kill Bill' vs 'Save & Improve Bill' deadlock here on DKos- I will do a nooks-and-cranny exploration of the HCR Bill in a series of diaries. Hopefully this will refocus our energies and advance the debate beyond the current logjam.

As the cliche goes- the devil is in the details. In a previous diary I facetiously brought to your attention the religious exemption to the much hated Mandate. Well- as it turns out, you don't even have to swear off pancakes and join my new cult to avoid the Mandate...

To briefly recap- the HCR requires everyone (except native americans, low income people, undocumented immigrants, followers of my cult, the grandfathered**, etc) to purchase health insurance. Violators will have to pay a $750 per head penalty on their tax returns starting in 2016. If you want to pull a Keith Olbermann and become a Mandate dodger, predictably, the HCR has this to say about it:
SEC. 5000A(g)(1)

(1) IN GENERAL.—The penalty provided by this section shall be paid upon notice and demand by the Secretary, and except as provided in paragraph (2), shall be assessed and collected in the same manner as an assessable penalty under subchapter B of 23 chapter 68.

The IRS will have your ass, etc, etc. All very predictable. UNTIL you read on to section (2):

(2) SPECIAL RULES.—Notwithstanding any other provision of law—
‘‘(A) WAIVER OF CRIMINAL PENALTIES.— In the case of any failure by a taxpayer to timely pay any penalty imposed by this section, such taxpayer shall not be subject to any criminal prosecution or penalty with respect to such failure.
‘‘(B) LIMITATIONS ON LIENS AND LEVIES.—The Secretary shall not—
‘‘(i) file notice of lien with respect to any property of a taxpayer by reason of any failure to pay the penalty imposed by this section, or
‘‘(ii) levy on any such property with respect to such failure.

Woah!!!! The mother of all loopholes! It turns out the mandate is not mandatory because the penalty is purely voluntary! What happens if you failed to pay that penalty? Nothing! No criminal charges will be filed, no penalties will be assessed, and the IRS has no right to file any lien on you. Imagine a judge saying to a convict: "This court hereby sentences you to death. Pssss- don't worry, son- our electric chairs are not plugged in."

What to think about this clause? On the one hand, as someone who is very unenthusiastic about the mandate- I am glad to see that it is toothless. On a deeper level though, I have to say, this is a weasely, spineless piece of legislation. It seems like the legislators want to have it both ways. They want to be able to claim that they have enacted a mandate with a fair penalty. At the same time they can turn around and say that the mandate is not that bad because there is no penalty for ignoring the penalty. This is CYA legislation at its worst.

If the mandate is a good idea- then it should be enforced meaningfully. If the mandate is a bad idea- then it should be scrapped. If the penalty is too high then let's reduce it or rework it. By having a draconian mandate and a sizeable penalty, but at the same time opening a Mack Truck sized loophole- is just cynical legislating. Even worse- this loophole will only be available to certain people. Self employed people will be able to benefit from it. Employees who have their taxes withheld from their paychecks, and who usually expect a tax return (EIC or home owner's deduction, etc) will be out of luck- since Uncle Sam will just deduct the $750 penalty from the tax return.

**Speaking of loopholes- commenters on my other thread alluded to the 'grandfather' loophole. Basically anyone who is currently (ie. as of the date the HCR is enacted) enrolled in any kind of health plan, even the complete garbage plans that advertise on late night TV, will be able to continue on their plans without penalties (per SEC. 1251). This is just an invitation for abuse. I could offer you a bogus 'insurance plan' which only costs you $10 a year (it only covers prayer-healing). You can now claim you are 'insured' and grandfathered in. Now you are exempt from the mandate and the $750 penalty as long as you continue to pay me $10 every year. I take Paypal.

Originally posted to icemilkcoffee on Mon Dec 21, 2009 at 03:27 AM PST.


This Mandate penalty waiver loophole is

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