IRS Obamacare Ruling Buffets Some Missouri Graduate Students

College towns are typically bastions of liberalism, and Missouri’s uber-college town of Columbia is no exception. Columbia Tribune reporter Rudi Keller even wrote (tongue-in-cheek) earlier this year about the city and its county “seceding” to create its own state, in part to better cater to the region’s political sensibilities. (How a “state” economy heavily dependent on state spending would survive is, of course, anybody’s guess.)

But even in an aspiring liberal utopia like Columbia, the consequences of overbearing government are still very real. Enter the IRS, two weeks ago.

Graduate students employed by the University of Missouri will have a harder time paying for health insurance after the university told students Friday it is taking away subsidies that help with premium costs.

Associate Vice Chancellor for Graduate Studies Leona Rubin said the change is the result of a recent IRS interpretation of a section of the Affordable Care Act. The law, which requires adults to have health insurance or face tax penalties, “prohibits businesses from providing employees subsidies specifically for the purpose of purchasing health insurance from individual market plans,” the university said in a letter sent to students Friday.

The IRS, Rubin said, considers the university’s student health insurance plan from Aetna to be an “individual market plan.” Because of the IRS classification, the university cannot give graduate students with assistantships a subsidy to help with health insurance costs, Rubin said.

According to Rubin, the University “could be fined $36,500 per student per year” if it continues its health insurance subsidy program…which makes it even more strange that the University apparently restored the subsidies in question last week.

It remains to be seen whether the threatened fine noted by the associate vice chancellor was a paper tiger meant to provide cover for cost cutting on Mizzou’s part or if that enormous fine is still actually on the horizon. The University of Missouri–St. Louis (UMSL), which took similar action in stopping insurance subsidies of its own, is sticking by its original decision to end its program. And it’s part of a national trend, thanks to Obamacare and the IRS. Keep in mind: while Mizzou has reversed its decision, the IRS certainly hasn’t changed its interpretation.

There’s a sad irony involved here, of course, when a university community generally supportive of big government is itself undermined by big government. And there’s lots to criticize: the credibility gap facing Mizzou’s administration, the timing of the announcement, the threatened walk-out by the graduate students, and so on.

But one of the most disturbing elements of this story is how disruptive Obamacare has been to a health care practice that, by most accounts, was working just fine, and the swift manner in which unaccountable federal bureaucrats were able to upend it nationwide. That a law passed 5 years ago is still changing without legislation is great cause for concern—not only for our health care, but for our democracy, as well. This is a teachable moment, but there’s no telling whether Missouri’s universities will learn from it.