The Single Word That Could Make or Break Obamacare

Finally, the tax label might lead people to believe that others are not fully complying with the law, providing another reason to avoid purchasing health insurance. We know from research that our beliefs about whether others are complying with a law impact whether we will comply with it ourselves. If I see the car in front of me going over the legal speed limit, I am more inclined to go over the speed limit, too. And there are widespread beliefs among many Americans that people do not pay their fair share of taxes. The allegation by Senate Majority Leader Harry Reid (D-NV) that Republican presidential nominee Mitt Romney had paid no taxes would not have gained the traction in public opinion polls it did if Americans believed everyone paid their taxes. The perception that tax evasion is widespread is partly responsible for leaving the IRS hundreds of billions of dollars short of expected tax revenues every year.

If the mandate is framed as a tax, this could cut in several directions, all of which would reduce health insurance coverage. It could lead people to suspect that others are neither paying the tax nor purchasing health insurance, leading them to try this strategy themselves. Or, given that purchasing health insurance is several times more expensive than paying the tax (which, in 2014, will be only $95 or 1% of income), people might decide to pay the tax rather than purchase the more expensive health insurance. And this phenomenon can build on itself: once an impression of low compliance with the mandate is forged, fewer people will comply, further reinforcing the low compliance impression, and so on.

In either situation, the tax label could lead significantly fewer Americans to purchase health insurance than the penalty label would. The success of Obamacare depends crucially on people buying health insurance under the mandate rather than making a payments to the government. Because the law prevents insurers from denying insurance to those with preexisting conditions, this will lead to more sick and more costly folks entering the insurance pool. The only way to keep costs from skyrocketing or insurance companies from dropping out of the market, or both, is either to get more healthier, cheaper folks to join the insurance pool, or have them pay an equivalent dollar amount.


With the tax frame, though, individuals are less likely to buy health insurance. And the mandate as currently structured forces them to pay only a small amount for the failure to do so.

If the framing of the law matters for its success, then our attention should turn to the current framers-in-chief: the president of the United States and his presidential challenger. In the near term, the current presidential campaign will supply Americans with most of their information about this law. If Mitt Romney describes the mandate as a penalty, that will color how Americans view it when it takes effect. If President Obama defends his law as a tax to achieve universal health care, that term will gradually trickle into people's ears.

This is not even to mention the influence that the next president will have on these framing issues once he stops campaigning and takes office next January. President Obama in a second term could direct the IRS to take steps to ensure that Americans are aware of the obligations under the mandate; a President Romney in his first term could direct his cabinet to find tax offsets to compensate for the new mandate tax. These sorts of decisions by a sitting president will affect how the mandate is framed, and thus whether it works.

For some reason, though, the framing of the mandate has disappeared from our discussions about the campaign. The Sunday after the Court's health care decision at the end of June, Romney was pressed on the issue on the morning shows, and his responses made headline news. Now this issue appears nowhere.

That is why this debate season provided a golden but missed opportunity. These are the most watched presidential debates since Ronald Reagan took the stage for the first time as a presidential nominee in 1980. While the candidates took positions on Obama's defining legislation in the debates and on the campaign trail, they have avoided critical questions about health care, like whether the law is a tax or a penalty, for months.

Our presidential campaigns--and our presidential candidates--owe us more than that.

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Naomi Schoenbaum is an associate professor of law at George Washington University Law School.

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