More Tax Implications Under Obamacare

I've detailed some of the changes proposed under HR 3200 previously, but here's a new issue. It has to do with the IRS sharing information with the Social Security Administration to get more people already eligible for the health care programs to be informed of just that.

Section 1801(a) says that the Social Security Administration can obtain tax return data on anyone who may be eligible for a "low-income prescription drug subsidy" but has not applied for it.

Over at the Institute for Policy Innovation (a free-market think tank and presumably no fan of Obamacare), Tom Giovanetti argues that: "How many thousands of federal employees will have access to your records? The privacy of your health records will be only as good as the most nosy, most dishonest and most malcontented federal employee.... So say good-bye to privacy from the federal government. It was fun while it lasted for 233 years."

The full text of Section 1801 can be found here.

The provision is supposed to help bring those people who would normally qualify for such problems into the federal health care benefits. It's been repeatedly shown that no matter how much effort is made to extend benefits to more people, some never get the memo that they're eligible for benefits, so they don't apply.

NY and a couple other states have spent significant sums trying to enroll people in SCHIP, and yet every year thousands of kids go without insurance that they're otherwise eligible for.

The problem is that it opens up a whole can of worms on confidentiality of tax returns and who can have access. There are far less intrusive ways in which this information can be transmitted to the end user - the consumer, without changing confidentiality of tax information laws.

I will tackle each in terms of increasing preference (and simultaneously improves confidentiality of tax information).

First, instead of the IRS providing a list redacting income eligibility information, it could simply provide names, addresses, and other basic identifying information to the SSA so that they can contact the affected individuals.

Second, the SSA could simply include in every mailing a pullout indicating that people may be eligible for health care benefits and should check with the appropriate agency. That would completely avoid the sharing of confidential information altogether.

Third, doctors and other medical personnel (and their health insurance experts who process the paperwork) could be required inform said individuals that they qualify or are eligible for the government benefits. We already require them to do so on other matters of health policy, so this isn't all that more difficult, and the intake into such programs could be handled on the spot, speeding reimbursement for the doctors.

The second and third options completely avoid the confidentiality provisions, and the third option targets those individuals in the course of their actually obtaining medical care and who might not be aware of the government policy that would cover their care.

The second option (sending out regular notices with other Social Security mailing) might allow some people to choose to opt-in or out of the program, but since this Administration is bent on not allowing anyone to opt out of coverage, would have gaping holes in participation rates.

So, in sum, the bill provides for new intrusive manners in which confidential tax information is shared within various government agencies, but alternatives could achieve the same result at less cost, and could even be provided at point of care, when such individuals need the coverage (and medical care practitioners need the reimbursement).

That option wont get discussed, primarily because it doesn't expand government power.