Pop quiz time. What government agency would administer perhaps the two biggest initiatives at the core of Congress' health overhaul proposal: a set of subsidies to help low-income people buy coverage, and a requirement that everyone have it?
The IRS may soon be checking whether you're insured.
Intuition might suggest the Department of Health and Human Services. Wrong!
Instead, the Democrats' legislation would pin the job on the Internal Revenue Service. That's right, the IRS. The assignment would come on top of a long list of other responsibilities that stretch well beyond what you might think normally falls under a tax collector's job description.
The IRS would require almost all taxpayers to include proof of insurance in addition to their tax returns, or face penalties that could be as steep as 2.5 percent of their income, USA Today and Kaiser Health News report. The service would also be charged with collecting a slew of new taxes from insurers, drugmakers and businesses, and divvying out hundreds of billions in new tax credits to subsidize insurance for low-income people.
The sweeping scope of that new work load has some experts wondering whether the IRS — a cash-strapped agency with staffing problems and outdated computers — is up to the task. As it is, even without an new roles, the tax service has fallen behind on its existing chores, failing to collect nearly $300 billion in 2005, the last year it published an estimate.
"Congress is unwilling to give the IRS the resources that it needs to do its main job, collecting taxes," said Howard Gleckman, of the Urban Institute, noting the so-called tax gap. "It is true that [the overhaul] would be asking the IRS to take on a much bigger role than it's probably prepared to take on."
Already, the IRS administers much of the nation's welfare program through the Earned Income Tax Credit, not to mention tax benefits for people who buy first homes, go to college, or receive health insurance through their employers.
John Dalrymple, a former IRS deputy commissioner, tells us the role of social engineer is one the tax service has long grappled with: "On one hand, many believe it's cheaper to administer new initiatives through the tax code, because it keeps administrative costs low. On the other hand, policy makers might ask 'is it really part of the tax system, or is it something more akin to welfare.'"
Weaver is a reporter for Kaiser Health News, a nonprofit news service.