Freedom Line Blog

Daniel Payne at The Federalist has a must-read article explaining the perverse and punitive feature of ObamaCare that allows the federal government to “clawback” subsidy amounts from eligible recipients.

“If you’re flat broke at the beginning of the year and accept tax credits from ObamaCare for several months, then find a high-paying job with health insurance halfway through the year and make enough money to put yourself over the subsidy threshold, you’ll owe back every penny of those subsidies you received come tax season, even though you had no money when you received them,” writes Payne.

ObamaCare’s critics have warned that the law would discourage people from getting better paying jobs for fear of losing their health insurance subsidy. In practice, it looks like the penalty on work could be even worse.

Ladies and gentlemen, please welcome another politically-motivated ObamaCare delay to the stage!

Megan McArdle sums up the IRS’ decision to let those who received too much in ObamaCare subsidies last year get extra time to pay back the difference (called the law’s “clawback” provision).

“It’s not relieving you of the obligation to repay; it’s just saying that you won’t be liable for a penalty if you don’t repay by the deadline,” explains McArdle. “Interest will continue to accrue, but the interest rates that the IRS charges are actually pretty reasonable (and probably much better than what your credit card company charges). It’s the failure-to-pay penalties it layers on top – half a percentage point a month, with even stiffer penalties for failing to file – that really make your tax bill add up fast.”

That is, if the Obama IRS ever gets around to enforcing the parts of laws it doesn’t like. McArdle writes, “The IRS emphasizes that this is a one-time deal, just for 2014. But I’m not sure if you should believe it. This emphasizes one of the problems we’ve spoken about a lot in this space: The political will to impose the costs of the Affordable Care Act is a lot less strong than the will to distribute the benefits.”

The Republican establishment was once derided as the tax collector for the welfare state. If Obama and the Democratic Party can’t be bothered to administer both the costs and the benefits of their so-called health reform law, the GOP shouldn’t shoulder the burden of balancing its books.

Every politically-motivated delay in enforcing an aspect of ObamaCare is a tacit admission by its supporters that the law is unworkable in practice. Republicans should acknowledge the obvious and start afresh.