Does Anybody Actually Think That Obamacare Can Work?

As the implementation deadlines for Obamacare approach, a debate rages as to whether it will prove to be a boon or a train wreck.  If you have actually looked at the text of the law (available here) you will have seen that there are hundreds of provisions that are so complicated that it is just beyond human capability to do this.  But today I want to look at one aspect of the law that in my view shows a complete lack of comprehension of how the world works.

In its quest to achieve perfect social justice, the Affordable Care Act at multiple points defines eligibility for various benefits and subsidies in terms of where a person's household income ranks relative to the "poverty line."  

For example, Section 1331 defines the eligibility for the expansion of Medicaid in the states.  According to Section 1331(e)(1), here's who qualifies:

In this section, the term ‘‘eligible individual" means . . . an individual . . .
(B) whose household income exceeds 133 percent but does not exceed 200 percent of the poverty line for the size of the family involved, or, in the case of an alien lawfully present in the United States, whose income is not greater than 133 percent of the poverty line for the size of the family involved but who is not eligible for the Medicaid program under title XIX of the Social Security Act by reason of such alien status.

And then they're supposed to figure that out by asking the IRS.

Well here's the problem: how is the IRS supposed to know?  The IRS maybe has your tax return as of last December 31.  Of course many people at or near "poverty" didn't file a tax return for last year at all.   But assume you did.  You could have had 8 changes in your life since then that affect your "poverty" status.  You could have gotten a job, or lost one.  You could have gotten married, or divorced.  You could have had a kid, or twins, or had a kid move away.

Consider me back in my law school days.  January to May -- no job, no income, living apart from parents, subsisting off a scholarship (doesn't count for measure of "poverty") and savings from last summer's job (also doesn't count for the measure of "poverty").  Poverty!  I'm eligible!  June to August -- summer job.  Suddenly I'm back in the so-called "second quintile" of the income distribution.  September to December -- back into "poverty"!  The IRS knows nothing about all of this as it is occurring.  Or consider the many, many casual and construction workers in the world, who work for a few days or weeks, then get laid off, then work for another few days or weeks, and so on through the year.  They can go in and out of "poverty," (or 133 to 200 percent of "poverty") by the Census Bureau definition easily ten times in a year.

So is your "poverty" status for this law to be determined from last year's tax return no matter what has happened since?  That's not at all how the Census Bureau determines "poverty" in their surveys -- they look at your (self-reported) status on the date of the survey.  Suppose you lost your high-paying job six months ago and you are now making just enough to get you into that 133 to 200 percent of poverty category.  Does it count or not? And exactly how is the IRS supposed to have any relevant information on this?

The dummies who make these laws have an image of the world where everybody works through the year at a level-salary job that determines their ongoing and unchanging status in life.  The fact is that the world doesn't work that way, and basically that's why we have "poverty" (Census Bureau definition) in the first place.

Needless to say, I'm putting my bets on "train wreck."  But then, what kind of train wreck?   There's the kind where they actually try to do it honestly.  Of course, that kind is impossible, so no, it won't be that.  And then there's the dishonest kind, where you just take people's word on eligibility, and then never check again as they leave poverty status (maybe permanently or maybe to go in and out ten times a year).  Over time the program turns into a massive fraud where maybe a third of the population is getting improper subsidies.  That's certainly the approach being taken with food stamps.  It's also the approach that makes the government grow as fast as possible and add as many dependents as possible right now.    It's not sustainable and will contribute greatly to the huge crash some years out, but why should today's politicians care about that?