For decades, the infamous “squeegee man” has represented a symbol of urban blight within New York. But if some on the left have their way, Americans could face a new concept in the coming years: “Squeegee Insurance.”
For the uninitiated, squeegee men accost vehicles stopped at traffic lights in New York and other cities. After cleaning the vehicle’s windows, the squeegee men demand payment for a “service” most drivers did not want or ask for. Similarly, the left now wants to enroll people in health insurance without their knowledge — and then send them a retroactive bill for their premiums come tax time.
Forcibly Enroll People in Coverage?
To date, Democratic presidential nominee Joe Biden’s health care plan has only endorsed automatic enrollment for low-income individuals, who would be placed into Medicaid or his proposed new government-run health plan. These individuals likely would not owe any premiums, and therefore would not face the “squeegee” dynamic of paying out-of-pocket for coverage they were enrolled in without their knowledge.
But many others on the left would go further, forcibly enrolling most or all Americans into health insurance. The Congressional Budget Office recently released a report requested by four House Democrats examining various forms of default coverage. Likewise, the Center for American Progress, the Brookings Institution, and the Urban Institute — all left-leaning think-tanks — have released policy papers regarding the issue.
In many ways, default coverage represents a greater intrusion into the lives of Americans than Obamacare’s individual mandate. While the mandate simply taxed individuals who didn’t purchase coverage, default coverage would force people to “buy” insurance, sending them the bill after the fact. As such, the proposal not only faces constitutional and philosophical challenges but practical difficulties as well.
Socking the Middle Class with Big Tax Payments
Individuals automatically enrolled in a plan without their knowledge would have to pay an entire year’s premium in one fell swoop. For instance, a household otherwise without health coverage this year, and automatically enrolled into a default option, would have to pay all of this year’s premiums when filing 2020 taxes on April 15, 2021. The CBO explains this “tax obligation could total thousands or even tens of thousands of dollars,” particularly in cases where households do not qualify for subsidies.
To give some sense of the bills Americans could face under this default coverage, the CBO noted that the average premium for a single 40-year-old purchasing Obamacare benchmark coverage totaled $5,700 in 2019. Under current law, an individual making $50,000 per year would not qualify for an income-based insurance subsidy, meaning he would have to pay this $5,700 entirely out-of-pocket.
Biden’s plan does propose eliminating these income caps on subsidy eligibility and increasing subsidy levels overall, although it lacks specifics on the latter front. As Obamacare premiums rise with age, individuals over age 40, or households forcibly enrolled in family coverage, would pay far more.
Internal Revenue Service data show that in tax year 2018, 76.5 percent of households with adjusted gross incomes of between $50,000-$75,000 received refunds. But the size of the refunds averaged $2,664 — less than half of the $5,700 premium cited by CBO. Sending retrospective bills of thousands, or tens of thousands, of dollars in insurance premiums wouldn’t just garnish Americans’ tax refunds — an important source of savings for many families — it would put them in a significant financial hole to boot.
The “solutions” to this problem put forward in policy papers border on farce. The Brookings study added that “tax filers facing large liabilities…could be given special rights to establish a payment plan” with the IRS. That means people would spend years paying off premiums for coverage they may not have known about, wanted, or even used. Indeed, the CBO observed Congress “could grant the IRS greater authority to collect premium-equivalent taxes by garnishing wages, imposing liens, or other means,” while adding with typical understatement that “those strategies might be controversial.”
Broken Promises Ahead?
Recall too that Biden has said that individuals with incomes below $400,000 will face no tax increases under his administration. Yet even as he makes promises on the campaign trail, leftist groups have come up with ways — like default coverage — to break those promises and stick middle-class Americans with thousands of dollars in tax bills.
The intrusive nature of proposals like default coverage explains why Biden says voters don’t deserve an answer from him about packing the U.S. Supreme Court. The left desperately wants to pack the court, to ensure the justices will rubber-stamp these types of radical schemes. While the American people deserve a clear answer from Biden on court packing, they don’t deserve the intrusive government takeover of health care that the left has in store.