Is the Affordable Care Act's individual mandate the worst tax ever designed?

A piece in this morning's Wall Street Journal makes a pretty convincing case that it is.

Adding insult to injury, the mandate doesn't even help with the problem it originally was supposed to solve: how to provide medical care to people with pre-existing conditions, according to the article by Chris Pope, a senior fellow at the Manhattan Institute.

Here is how Pope describes the basic design of the individual mandate:

First, you would structure it to inflate the cost of an essential product. Then, you’d create exemptions so vast that only 5% of taxpayers were subject to it. You might even ensure that it hit people only when they were particularly vulnerable—like when they’d lost a job. Finally, you would use it to drive enrollment in entitlements, so that it increased the federal deficit by $338 billion.

In short, you would design something that looks very much like the Affordable Care Act’s individual mandate.

The Manhattan Institute in October released an issues brief entitled "The Individual Mandate Is Unnecessary and Unfair." Pope's article is based on this very helpful study. Senator Tom Cotton, Republican from Arkansas, recently has urged the repeal of the individual mandate be a part of tax reform. Pope says that the scare-mongerng in reaction to Cotton's proposal is an indication that there is go good argument to be made for the mandate.

Here is the conclusion of Pope's article:

The main effect of the mandate has been to concentrate the burden of subsidizing the chronically ill on those who lack employer-sponsored health insurance or eligibility for public entitlements. This is a very low-income group: 79% of households that had to pay the mandate tax (which starts at $695 per year for individuals earning more than $10,350) had annual incomes of less than $50,000. It’s no wonder that Barack Obama opposed this funding mechanism during the 2008 primaries. “If a mandate was the solution,” he said, “we could try that to solve homelessness by mandating everybody buy a house.”

Without the mandate, the cost of supporting those with pre-existing conditions would be spread more broadly, including the bulk of upper-income individuals who receive employer-sponsored coverage.

Of the 18 million people enrolled in the individual market, only two million are estimated to have major pre-existing conditions. Repeal of the mandate would allow the bulk of them to choose soon-to-be deregulated insurance at half the cost of ACA-compliant plans. As 70% of individual-market enrollees would remain eligible for subsidies, they would not be adversely affected. Only a tiny subset of Americans would be likely to see any increase in premiums from the repeal of the individual mandate—and CBO has estimated this increase would only amount to 10%.

The individual mandate is not essential to the ACA’s coverage expansions. It serves only to accentuate the law’s inequities.

I urge you to read the entire article.