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6 Million Americans Will Be Hit By ObamaCare Tax Penalty

A lot more people than expected are likely to be hit by the ObamaCare individual mandate tax penalty than previously thought.

AP (“Tax penalty to hit nearly 6M uninsured people“):

Nearly 6 million Americans — significantly more than first estimated— will face a tax penalty under President Barack Obama’s health overhaul for not getting insurance, congressional analysts said Wednesday. Most would be in the middle class.

The new estimate amounts to an inconvenient fact for the administration, a reminder of what critics see as broken promises.

The numbers from the nonpartisan Congressional Budget Office are 50 percent higher than a previous projection by the same office in 2010, shortly after the law passed. The earlier estimate found 4 million people would be affected in 2016, when the penalty is fully in effect.

That’s still only a sliver of the population, given that more than 150 million people currently are covered by employer plans. Nonetheless, in his first campaign for the White House, Obama pledged not to raise taxes on individuals making less than $200,000 a year and couples making less than $250,000.

And the budget office analysis found that nearly 80 percent of those who’ll face the penalty would be making up to or less than five times the federal poverty level. Currently that would work out to $55,850 or less for an individual and $115,250 or less for a family of four.

Average penalty: about $1,200 in 2016.

“The bad news and broken promises from Obamacare just keep piling up,” said Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee, who wants to repeal the law.

Starting in 2014, virtually every legal resident of the U.S. will be required to carry health insurance or face a tax penalty, with exemptions for financial hardship, religious objections and certain other circumstances. Most people will not have to worry about the requirement since they already have coverage through employers, government programs like Medicare or by buying their own policies.

A spokeswoman for the Obama administration said 98 percent of Americans will not be affected by the tax penalty — and suggested that those who will be should face up to their civic responsibilities.

“This (analysis) doesn’t change the basic fact that the individual responsibility policy will only affect people who can afford health care but choose not to buy it,” said Erin Shields Britt of the Health and Human Services Department. “We’re no longer going to subsidize the care of those who can afford to buy insurance but make a choice not to buy it.”

The budget office said most of the increase in its estimate is due to changes in underlying projections about the economy, incorporating the effects of new federal legislation, as well as higher unemployment and lower wages.

Now, frankly, a $1200 penalty is pretty small. My monthly premium is north of $800 and even young singles would be hard-pressed to find a policy under $200 a month, so the mandate really doesn’t do much to achieve its ostensible purpose of incentivizing the purchase of insurance. Presumably, though, it would help the taxpayers recoup the cost of mandatory treatment of the uninsured who need emergency treatment.

Politically, this isn’t great news for the president, since the mandate is the least popular part of the law. Given Romney’s past support for the policy and his general hamfistedness as a campaigner, though, he’s unlikely to capitalize.

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About James Joyner
James Joyner is the publisher of Outside the Beltway, an associate professor of security studies at the Marine Corps Command and Staff College, and a nonresident senior fellow at the Atlantic Council. He's a former Army officer and Desert Storm vet. He has a PhD in political science from The University of Alabama. Views expressed here are his own. Follow James on Twitter.

Comments

  1. I expect major procrastination, and so any early number will be high.

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  2. Andyman says:

    If I told you that the number of people being with, say, late-filing penalties is 2 million more than we originally thought, does that mean that the policy is bad, or that there are just 2 million more anti-social people than we’d estimated?

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  3. Ben says:

    Saying that “the mandate is the least popular part of the law” is like saying that “the check was my least favorite part of dinner”. Well … duh.

    Like or Dislike: Thumb up 11 Thumb down 0

  4. Rick Almeida says:

    Those affected can avoid the penalty by purchasing subsidized plans through the exchanges, right?

    Like or Dislike: Thumb up 5 Thumb down 0

  5. PD Shaw says:

    even young singles would be hard-pressed to find a policy under $200 a month

    I doubt it. Obamacare will make healthcare insurance coverage since it mandates more coverage, and it limits age-rating in order to redistribute the cost from the old to the young.

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  6. PD Shaw says:

    make = increase the cost of

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  7. Rob in CT says:

    Doug,

    Or, you know, people could purchase insurance.

    Now, frankly, a $1200 penalty is pretty small. My monthly premium is north of $800 and even young singles would be hard-pressed to find a policy under $200 a month, so the mandate really doesn’t do much to achieve its ostensible purpose of incentivizing the purchase of insurance. Presumably, though, it would help the taxpayers recoup the cost of mandatory treatment of the uninsured who need emergency treatment.

    Right.

    Agreed that people will grumble about this. Of course. People grumble about insurance generally, largely because they don’t understand risk.

    Like or Dislike: Thumb up 1 Thumb down 1

  8. JKB says:

    Presumably, though, it would help the taxpayers recoup the cost of mandatory treatment of the uninsured who need emergency treatment.

    Of course, taxpayers aren’t the ones who incur the costs for “uninsured” emergency treatment. The cost, presumably not paid out of pocket, are eaten by the health care providing organization. The charity comes from donations, assuming the individual doesn’t have any assets and doesn’t qualify for Medicaid.

    So the only taxpayers who might see some recoupment are the county tax payers who I believe are on the hook for the mandatory emergency stabilization treatment, although some of that get written off to the hospital charity account.

    But then, that could be covered by actual medical insurance that covered actual emergency care, hospitalizations and surgery. The kind of real insurance banned by the mandatory Obamacare coverage which requires everyone pay for services they won’t or can’t use.

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  9. Herb says:

    the mandate really doesn’t do much to achieve its ostensible purpose of incentivizing the purchase of insurance.

    Depends, I guess. Who wants to pay $1200 a year for nothing? Maybe some hardcore Galtian, but that’s enough to move most people into “minimum level of coverage” territory.

    And six million people up front? Less than 2% of the country? Not too bad, especially the first year. I suspects as the market adapts to the policy, the number of people paying the penalty will shrink, not grow.

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  10. Jeremy R. says:

    @Rob in CT:

    Doug,

    Or, you know, people could purchase insurance.

    Right, and the non-wealthy will get subsidies to help them buy that insurance.

    I wonder if the increased figure can be mostly be laid at the feet of GOP governors who are planning to resist the medicaid expansion at the lower end of the income scale.

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  11. rodney dill says:

    @PD Shaw: Blue Cross currently has Young Adult coverage under $100.00 a month. Though I have no idea (other than up) how this will change if the providers can’t charge based on age. I know 200 sounded too high as I’d looked for some coverage for one of my daughters a few years ago.

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  12. David M says:

    The change from 4 million expected to pay the penalty to 6 million doesn’t seem like a big deal. If it keeps increasing then it’s probably a sign that either the subsidies or the penalty should be increased, or even both.

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  13. Dexter says:

    All of the promises and figures that Obama put out have turned out to be at best inaccurate, and mostly way off. One idea is to give people a much larger tax deduction – like a straight deduction instead of a % – for all medical expenses. Another idea is to let people exchange time and services for treatment. A person could help paint or clean up the hospital, Doctors’ offices sometimes need repairs. A doctor in our town takes home grown vegetables and fruits as payments. It would depend on the person’s skills. Anyone could push a broom.

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  14. Moderate Mom says:

    @rodney dill: With a quick looks at the benefits section, it doesn’t look like this plan meets all the mandatory coverage required under Obamacare. My guess is that once the ACA goes into full effect, the premiums for the plan will go up. I did notice that there is no coverage for maternity or contraception on this plan. Also, it’s a 30/70 rather than the traditional 20/80 plan, so I’m not sure that this amount of coverage would be allowed under ACA or not.

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