113th Congress, Vote 97; House of Representatives #4118

SIMPLE Fairness Act

Official Title: To amend the Internal Revenue Code of 1986 to delay the implementation of the penalty for failure to comply with the individual health insurance mandate.

HR 4118: Suspending the Individual Mandate Penalty Law Equals Fairness Act or SIMPLE Fairness Act
Passed by the House March 5, 2014, 250-160 (20 abstaining).

Synopsis: The ACA includes a shared responsibility provision that requires most Americans to have health insurance in place starting on January 1, 2014. Those who do not have coverage (or an exemption) face a tax penalty for non-compliance.

HR 4118 would delay the implementation of the shared responsibility penalty by one year. People would still be required to have coverage, but there would be no financial penalty for non-compliance in 2014. For those who remained uninsured, penalties would only begin to accrue as of January 1, 2015 (HR 2668, passed by the house in 2013, was a very similar bill but it went one step further by fully removing the requirement that people maintain health insurance coverage in 2014).

As written, the ACA calls for penalties that increase significantly from 2014 to 2016 (from $95 per adult or 1 percent of income in 2014, up to $695 per adult or 2.5 percent of income in 2016). HR 4118 would shift the penalty structure forward one year, so while the penalty for 2014 would be zero, the penalties for 2015 and 2016 would also be lower than originally projected.

Why supporters pushed for this bill

• Initially, large employers were to be subject to the employer shared responsibility starting in 2014, but that was pushed back to 2015 or 2016 depending on the size of the business. Supporters of HR 4118 noted that if employers weren’t going to be subject to the penalty in 2014, individuals shouldn’t be either.
• HR 4118 was introduced during the first ACA open enrollment period for individual health insurance. The first couple months of open enrollment had been a disaster, and although things were better by February when the bill was introduced, there were still concerns that people were struggling to secure coverage for 2014 under the new system.
• The Congressional Budget Office projected that from 2014 to 2024, the federal government would save a total of $9.4 billion if HR 4118 were to be implemented. The savings would result from the fact that without the penalty, fewer people would enroll in Medicaid/CHIP and subsidized exchange plans.

Why opponents tried to stop the bill

• The CBO projected that without the shared responsibility mandate, there would be 1 million more people without health insurance in 2014 than there would be with the penalty in place. They also projected that a similar effect would be seen in 2015 and 2016, since the penalties in those years would be lower under HR 4118 than under the ACA as written.
• Enacting HR 4118 was projected to increase government costs for the risk corridors program by $100 million. Delaying the individual mandate penalty was expected to result in more people waiting until 2015 or later to obtain coverage, and it was assumed that the people delaying enrollment would be generally healthy. Thus the overall mix of insureds was expected to tilt slightly more towards sick enrollees in 2014 if HR 4118 was enacted, resulting in higher costs for the risk corridors program. This adverse selection would also result in higher overall health insurance premiums in the first few years of ACA implementation.
• In stating that President Obama would veto if HR 4118, the White House noted that HR 4118 would result in “higher premiums for those who remain insured, fewer premium tax credits for middle-income families, and increased cost-shifting of uncompensated care to health care providers, workers, and businesses.”

03/05/2014

Status: House passed

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