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Lawrence O'Donnell: The individual mandate is a 'mirage'

On Tuesday, Mother Jones' Kevin Drum—taking a cue from Washington Post columnist and MSNBC contributor Ezra Klein—asked whether the individual mandate provision in the Affordable Care Act even mattered. According to a segment on that night's edition of The Last Word, the answer is a resounding "no."

"The individual mandate is now simply a mirage," said host Lawrence O'Donnell. "It is only a mandate on paper."

The reason why, he said, was that it had been so thoroughly watered down since it was originally conceived as to be functionally irrelevant. That was not because of Republican objections, he said, but because liberals were "angry at the notion that poor people who could not afford insurance would be ordered by the government to buy it, and then be sent to jail if they didn't."

As a result, the penalties attached to not buying insurance were continually reduced, until they had neutered the policy entirely.

"In the final draft, the fine for not purchasing health insurance is so low—less than a hundred dollars for some people—that the level of fine provides absolutely no financial incentive to buy a product that costs thousands of dollars," said O'Donnell. "And that's what the fine is supposed to be: an incentive to buy the product."

He went on: "Many rational people who want health insurance will still not be able to afford it, even with the government subsidy, and so will rationally choose to suffer the very, very low fine of a hundred dollars."

Some people might not even pay that. As it turns out, the language of the Affordable Care Act seems to specifically forbid the federal government from enforcing the penalty.

"There you have it," O'Donnell said. "the only tax provision in which the IRS is forbidden from using any of its tools to actually collect that little, tiny tax."

Nonetheless, Drum argued that the mandate is not "meaningless," but had both "an objective and a subjective effect. " "Objective because it makes the financial case for buying insurance stronger," he wrote, 'and subjective because most people prefer to obey the law."

In a June 7 appearance on The Ed Show, Bloomberg View columnist Jonathan Alter predicted "utter chaos" if the Supreme Court ruled that the mandate is unconstitutional. Without that extra incentive to purchase insurance, he argued, people would be able to purchase and then drop health care policies at will. Health care companies would then be unable to cover the exploding costs, thanks other provisions in the Affordable Care Act, such as the ban on charging higher premiums for consumers with pre-existing conditions. 

In the end, O'Donnell suggested, the mandate's relative toothlessness might work in its favor. "Just one of the Republican appellate court judges who reviewed the health care bill cited the emptiness of the mandate in his opinion finding it constitutional," he said.

"And so it may be that the only way for the mandate to survive in the Supreme Court on Thursday," O'Donnell said, "is if the Republican justices figured out that the mandate is a mirage."