WASHINGTON — The success of the Affordable Care Act could turn on the performance of the IRS, which has avoided attention during the program's tumultuous rollout.
Enforcement of the new law will be up to the IRS, an already beleaguered agency charged under the act with carrying out nearly four dozen new tasks in what represents the biggest increase in its responsibilities in decades. None is more crucial than enforcing the requirement that all citizens secure health insurance or pay a penalty.
But the IRS's efforts have been hampered by a one-year delay in applying new insurance regulations to large employers. Those employers had been expected to provide insurance coverage information that the IRS would use to help identify who has insurance and who does not.
While failures in launching the federal insurance website and online exchanges have thrust the Department of Health and Human Services to the center of public attention, the IRS also has a huge role in carrying out the law, including helping to distribute trillions of dollars in insurance subsidies and penalizing people who do not comply.
The fine is intended to encourage healthy people to enroll even if they do not have an immediate need for care. If the elderly and the sick dominate the ranks of those who sign up, it could lead to what health economists call an " insurance death spiral" of rapidly escalating costs, premium hikes and declining enrollment.
Besides lacking coverage information that would help the agency enforce the "individual mandate," the IRS also is hamstrung in penalizing those who do not sign up. The lawmakers who drafted the health care law intentionally barred the IRS from using its customary tools for collecting penalties — liens, foreclosures and criminal prosecution. The only means of collecting the fine is to essentially garnish tax refunds for people who overpaid their taxes.
The increased workload comes as the IRS is suffering from high turnover of senior managers, years of budget cuts and congressional inquiries into the alleged politicization of the agency.
"This is really quite a heavy lift," former IRS commissioner Mark Everson, who served under President George W. Bush, said in recent testimony on Capitol Hill, adding that he was concerned about the agency's ability to fulfill the wide-ranging demands of the Affordable Care Act.
IRS officials say that they are on track to meet the law's requirements and that their computer systems are performing as hoped. "We're very pleased with the performance of our IT systems, which have been effectively and efficiently providing data to the marketplaces since the beginning of October," acting IRS commissioner Danny Werfel said in a statement provided to the Washington Post last week.
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Some of the tasks to be performed by the IRS are so vital to the success of President Barack Obama's health care initiative that any uncertainty about whether the IRS can do its job raises doubts about the overall endeavor. Health policy researchers say they know little about what level of enforcement is necessary to nudge citizens into buying coverage or whether the law's low fees — $95 in 2014 or 1 percent of income, whichever is greater — will succeed in doing so.
"We should be absolutely clear we don't know how this will work," said MIT economist Jon Gruber, referring to the size of the penalty. Gruber helped design the mandate used in the insurance plan Massachusetts launched six years ago.
If healthy citizens think there is little likelihood of credible enforcement of a dubious new law, many may decide to flout the insurance requirement.
"I now think there is little hope we are going to get enough younger, healthy people to sign up, and that means that this law is in grave danger of financial collapse," Robert Laszewski, president of Health Policy and Strategy Associates, a health care industry consultant in Alexandria, Va., said in an interview about IRS enforcement.
Other health insurance experts are more sanguine, saying public education may initially be more important than enforcement in getting healthy people to enroll.
"At the end of the day, people will sign up," said Lawrence Jacobs, a University of Minnesota political scientist who has studied the implementation of Medicare and other health systems. "We know from experience that a large number of people sign up for insurance simply because they are law-abiding citizens who don't want to be in violation of the rules."
Jacobs cited "the lesson of Massachusetts," where the state's pioneering health insurance program initially attracted people who were relatively unhealthy and in more urgent need of coverage. As the state publicized possible penalties, enrollment in the state program skyrocketed and stabilized the demographics of the insurance pool, he said.