What the IRS scandal means for health-care reform

The revelation that the Internal Revenue Service targeted conservative groups for extra scrutiny has given fuel to Republican complaints of government overreach. It's also given them more ammunition in their fight against the implementation of President Obama's health care law.


The IRS. (Susan Walsh/AP)

Half of the billion dollars allocated to cover implementation of the Affordable Care Act went to the IRS. Starting in 2014, the agency will distribute subsidies for health-care coverage through state exchanges and issue penalties against individuals who do not get or businesses that do nor provide insurance.

Republicans have claimed that the IRS will hire 16,000 new agents to deal with health-care reform; factcheckers have deemed that number "a partisan analysis based on guesswork and false assumptions." But the Obama administration has asked for more money for the IRS to enforce the new law. The president's 2014 budget calls for $1 billion more for the IRS, $440 million of which is intended to help with ACA implementation. A big chunk of that would go to updating and creating new information technology.

A Republican senator, Nevada's Dean Heller, has already announced legislation to suspend any funding for the IRS for new agents needed to deal with health-care reform until Congress is given more oversight over the implementation.

"With the recent events related to the Internal Revenue Service, I feel it is necessary that both Congress and the Department of Health and Human Services look closely at the money given to the IRS through the health care law," he wrote in a letter to Health and Human Services Secretary Kathleen Sebelius.

Others have also expressed concern.

"What's happened heightens fears about how the IRS will handle taxpayer information and wield its power when it enforces Obamacare starting next year," Sen. Chuck Grassley (R-Iowa) told the Washington Examiner.

And, Tennessee Republican Rep. Diane Black tweeted:

The Wall Street Journal editorial board is on the same page, saying "maybe there's a better candidate" to deal with Obamacare.

Henry Aaron, an economist and health-care policy expert at the Brookings Institution, said it's actually a lack of resources that creates these kinds of problems. The classification based on the terms "patriots" and "tea party" was an attempt to deal with a huge uptick in the number of groups applying for tax-exempt status.

"I think nobody has drawn what I think is the proper inference from this, which is that the IRS is severely underfunded in its enforcement division," Aaron said.

Republicans successfully pushed IRS budget cuts in 2011, and Acting Commissioner Steven Miller has said that the sequester could further reduce the agency enforcement ability. The GOP didn't need this scandal to deny the IRS funding -- but it certainly won't hurt.

Rachel Weiner covers cops and courts in Arlington and Alexandria.
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Juliet Eilperin | May 15, 2013