Does It Matter If The Mandate Is Called A “Penalty” Or A “Tax”?

The debate over whether the PPACA's individual mandate is a "penalty" or a "tax"seems rather pointless.

Ezra Klein argues that the debate that has developed in the wake of the Supreme Court’s ruling on the Affordable Care Act over whether the individual mandate is a penalty or a tax is really rather pointless:

Nor is it credible to say that this distinction will have real political consequences. “Tax” is not a popular word. But neither is “penalty.” It’s very difficult to imagine the voter who loved the idea of paying a penalty for going without health insurance — aren’t penaltiesgreat? — but is morally appalled at the prospect of paying a tax.

And, remember, the individual mandate is a well-known policy that is already extremely unpopular. In fact, it’s the most unpopular provision of the health care law, and always has been. The people who don’t like it already know they don’t like it. The people who do like it are, at this point, well aware that they like it. The idea that, this late in the game, even one vote will be decided by whether Republicans call this already-disliked policy “a tax” rather than “a penalty” or “government coercion” or “jackbooted thugs making you buy health care” strains credulity.

Klein points out, correctly, that the mandate works exactly the same way regardless of what you call it. If you don’t have health insurance and can afford it, then you are either charged a tax on your Form 1040, or you are assessed a penalty on your Form 1040. What, exactly, is the difference? Klein’s Washington Post collegue Chris Cillizza tries to explain the Republican strategy here, and why the Romney campaign needed to backtrack on the comments made earlier this week:

Republicans have long scored political points by bashing Democrats as lovers of big government who want to finance growth in the size of the bureaucracy by raising taxes. That the key provision of Obama’s health care law was upheld due to a tax provision, then, fits perfectly into an advantageous political frame for Romney — and Republicans more broadly.

I get the logic, and the reason why the Republicans are trying to hang the tax banner around the entirety of the PPACA, but I think Klein has a good point here. The law in general, and the individual mandate in particular, were also widely unpopular well before the Supreme Court rendered its ruling, Notwithstanding the fact that recent polls have shown the nation largely divided on how they feel about the Court’s ruling, it seems unlikely that those sentiments are going to change any time soon. It also doesn’t seem likely that the election is going to hinge on whether voters perceive the mandate as a tax or as a penalty. The logic of the Republican position seems to be that a government imposed “penalty” would be viewed more favorably than a tax, but that doesn’t seem very logical. People don’t like paying taxes, obviously, but who likes paying a penalty? Moreover, calling it a “penalty” raises implications that the person it’s being imposed on did something wrong. Who wants to be told by their government that they’ve done something wrong?

I’m also skeptical about the idea that the Supreme Court’s decision somehow means that the entire PPACA is now a tax. What the Supreme Court ruled last week is that the individual mandate is constitutional because it can be authorized under Congress’s power to “lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States.” Does that mean that the entire law is a tax now? As a matter of law, it most certainly doesn’t. Politically, of course, it’s quite a different matter and this is largely a war of semantics that will be won and lost in the news cycle. However, you can disagree with Chief Justice Roberts’ ruling as much as you wish, but it simply isn’t true to say that the Court ruled that ObamaCare is a tax.

Perhaps I’m wrong about this, but it strikes me that the Democrats and the Republicans are arguing over what is essentially a meaningless semantic difference. It really doesn’t matter whether you consider the mandate a penalty or a tax, if you don’t like it you’re not going to like it. It will be interesting to see some polling on this issue, but my guess is that the “penalty v. tax” debate is an entirely inside-the-beltway meme and that most voters don’t even understand what the two sides are arguing about.

FILED UNDER: Campaign 2012, Health Care, Taxes, US Politics
Doug Mataconis
About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May 2010. Before joining OTB, he wrote at Below The BeltwayThe Liberty Papers, and United Liberty Follow Doug on Twitter | Facebook

Comments

  1. With the June job reports coming out tomorrow I’d bet this issue suffers an early death. But no, the difference is irrelevant outside the beltway where people don’t have time to screw around with artificial distinctions.

    Tax, Penalty – it all means you’re screwed.

  2. Racehorse says:

    No, it doesn’t matter what it is called. The real name is: socialism.

  3. Ron Beasley says:

    @Racehorse: So I guess that means that the Heritage Foundation and Mitt Romney are socialists.

  4. I think I made the argument in these pages that it was just “naming” as well. So sure, I probably agree with Klein.

    Of course, Racehorse shows that naming can be taken too far. There is a dictionary definition of socialism:

    Socialism /ˈsoʊʃəlɪzəm/ is an economic system characterised by social ownership and/or control of the means of production and cooperative management of the economy,[1]

    If the nation were acquiring the insurance companies, owning them, then yes that would be socialism. Except we’re not.

    (I seem big on wikipedia definitions these days)

  5. Scott says:

    A couple of points:

    1. Yes, it is a pointless semantic argument

    2. The argument is primarily an intramural Republican debate.

    3. True, most folks won’t know what the fuss is about. They also don’t know what the PPACA is all about.

    4. Even though the public is not sure what the argument is, the larger debate is now about Mitt Romney and what he stands for, and whether he has any core ideas or principles. I sense that this has the potential to batter Romney more than any ad campaign about Bain capital.

  6. (That we’ll pay more than the socialists, for less life expectancy, is of course an irony left to the reader.)

  7. rodney dill says:

    For the functioning of the law it really doesn’t matter, and for the impact on taxpayers it shouldn’t matter either.

    For a politician that promised not to increase taxes, it matters.

  8. C. Clavin says:

    “…the debate…is really rather pointless..”

    As is the campaign of the guy trying so hard to make the distinction.

    As for Racehorse…can you explain how adding 30M+ customers to the rolls of private sector insurance companies constitutes socialism? Maybe that word…socialism…doesn’t mean what you think it means?

  9. C. Clavin says:

    “…a politician that promised not to increase taxes…”

    I’ll bet you in the aggregate he has not raised taxes. Certainly this so-called tax on 1% of the nation isn’t going to offset lowering the taxes of 90%+ of the nation. Try a little math.

  10. @rodney dill:

    For a politician that promised not to increase taxes, it matters.

    Even that is handled in a silly way. I think it’s really odd that “vaguely other people” who the the GOP don’t really want to defend (free riders) might get a tax increase, is treated as a general case.

    It’s not a highly cognitive attack.

  11. @rodney dill:

    Obviously this “largest tax increase in history” meme is about that. It’s an anti-intellectual claim meant to incite tribal fury.

  12. C. Clavin says:

    @ C. Clavin…
    And in addition to Romney raising the very same tax in MA…Romney also dinged every single one of us because he took huge Federal Aid to implement Romneycare.
    As Cato put it:

    “…Half of RomneyCare’s new spending was financed by the federal government through the Medicaid program, which is financed through federal taxes, which fall on taxpayers in all 50 states. That means that when Romney financed half of RomneyCare’s new spending by pulling down more federal Medicaid dollars, he increased taxes on residents of all 50 states…”

  13. Perhaps I’m wrong about this, but it strikes me that the Democrats and the Republicans are arguing over what is essentially a meaningless semantic difference

    No, you are not wrong.

  14. C. Clavin says:

    @ C. Clavin…
    Which means Romney has already raised our taxes…and he hasn’t even gotten to the Republican Convention yet.

  15. C. Clavin says:

    I know you are dying to use the both sides do it meme…but seriously…the vast bulk of this discussion is Romney trying to ding Obama for doing what he himself did. Santorum was right…Romney was the worst choice to run against the PPACA.
    As for the Obama side…they seem to be simply stating, more or less, what you did…

    “…I’m also skeptical about the idea that the Supreme Court’s decision somehow means that the entire PPACA is now a tax…”

  16. Stan says:

    “When I use a word,” Humpty Dumpty said in rather a scornful tone, “it means just what I choose it to mean — neither more nor less.”

    “The question is,” said Alice, “whether you can make words mean so many different things.”

    “The question is,” said Humpty Dumpty, “which is to be master – – that’s all.”

  17. rodney dill says:

    @C. Clavin:

    this so-called tax

    Sounds like it matters a lot to you what it is called.

  18. C. Clavin says:

    Sullivan nails it…

    “…What we’re seeing is a candidate not strong enough to stand up to his base, but a candidate so weak he has to ventriloquize it…”

  19. rodney dill says:

    @john personna: It’s politics, what exactly is intellectual about it?
    Even using the phrase ‘incite tribal fury’ is a mildly derogatory non-intellectual phrasing, meant to invoke inferiority. You could have just as easily said ‘meant to evoke a certain voter response.;

  20. @rodney dill:

    Actually, that was an opportunity for someone to provide data about that “largest tax increase.”

    Without that, my harsh criticism might hold up pretty well. I mean jeez, should there be no penalty for dishonest hyperbole?

    (I’m still remembering the clowns who showed up here and said “you can’t normalize a number by GDP, that’s unheard of, and a liberal plot.” That despite the fact that the didn’t actually show that the nominal dollars were “largest.”)

  21. C. Clavin says:

    @ Rodney…
    I don’t care what it’s called…tax, penalty, incentive…as long as the un-insured stop costing me $1000 a year.

  22. (Basically Rodney, don’t get trapped defending the indefensible.)

  23. rodney dill says:

    @C. Clavin: ….and if what I pay combined with what the company I work for pays for my healthcare goes down by this $1000.00, I agree.

  24. rodney dill says:

    @john personna: I’ve been careful with my wording as to what I’m stating as far as this post is concerned. (as far as what I’m defending or not defending)

  25. jan says:

    “It will be interesting to see some polling on this issue, but my guess is that the “penalty v. tax” debate is an entirely inside-the-beltway meme and that most voters don’t even understand what the two sides are arguing about.”

    According to the recent Pew Poll 45% of the people were fairly unaware, and not followig the ACA ruling — broken down it was vaguely 30% didn’t know what the ruling was, and the other 15% thought the mandate had been struck down. These people are basically asleep, politically. IMO, the word penalty has a much softer tone to it, and people often won’t apply the financial impact to them. That’s the given reason why the social progressives didn’t use the term in order to have it pass Congress.

    However, to pass the rigors of Constitutional scrutiny, the classification of ‘penalty,’ under the Commerse Clause, didn’t cut it. I think that’s a pretty important differentiation, being the difference between the mandate passing or not. Furthermore, the word ‘tax,’ IMO, will jar more people awake, that there might indeed be some financial cost to them, to what was originally touted as ‘free’ medical care. Especially for those who have no idea what Obamacare is all about, the word ‘tax’ will raise a red flag.

    Pocketbook issues, at least those that are preceived as such, catch people’s attention, and do influence their votes.

  26. jan says:

    @C. Clavin:

    I don’t care what it’s called…tax, penalty, incentive…as long as the un-insured stop costing me $1000 a year.

    A perfect example of a person looking out for their own financial interests — a pocketbook rationalization. However, in the long run it will cost more than a $1000/year … just not right away.

    The ACA is far from cost effective. It’s main focus was to put everyone on health care. As more and more people have been saying, having a health care card, though, will not guarantee people to timely, or even any access, to health care, let alone considering quality HC.

  27. al-Ameda says:

    @Racehorse:

    No, it doesn’t matter what it is called. The real name is: socialism.

    If I’m going to be called a socialist by conservatives who don’t know what socialism is, then the least we can do is adopt a socialist program that I want so that I can accurately be accused of being a socialist. I want an actual Single Payer Health Insurance for all, not just for senior citizens.

    The reason ACA is a complex mess is because we are unwilling to be rational and move to a single payer health insurance system for all.

  28. David M says:

    @jan:

    to what was originally touted as ‘free’ medical care.

    I remember it being described as affordable, but certainly not free. If there was widespread belief it provided free health care, then it would be much more popular.

    Also, there’s no reason to think the tax will make people rethink their support of the bill. If they supported the bill, they want health insurance and would not be subject to penalty.

  29. walt moffett says:

    Just to throw another log on the fire. When the Government hits me with a pay now penalty, it is punishment and the right to a fair trial/appeal exists. If there is no right of trial/appeal, well ask Sam Adams what the response is. A tax imposed by legislation on the other hand is something I either pay or stand in front of the judge. In short, one is summary justice the other is due process of law.

    BTW, has anyone figured out how High Deductible Health Plan holders will be forced to pay their deductibles or will that cost be absorbed by the system?

  30. Herb says:

    “Perhaps I’m wrong about this, but it strikes me that the Democrats and the Republicans are arguing over what is essentially a meaningless semantic difference.”

    Weak….as if there’s really a two-side argument going on here.

    Republicans are so desperate to kill Obamacare that they can’t stop lying about it. It’s bad form for Democrats to just come out and say that, though, so they end up “arguing” with Barney Frank’s kitchen table. “It’s a tax….it’s a penalty.”

    Who cares? It’s the law.

  31. al-Ameda says:

    @jan:

    that there might indeed be some financial cost to them, to what was originally touted as ‘free’ medical care

    To my knowledge, the only people who referred to ACA as providing ‘free’ medical care were conservatives.

  32. David M says:

    @walt moffett: I don’t think there is any change to how people with health insurance will pay their portion of the costs.

  33. JKB says:

    @Herb:

    But the law is only Constitutional if it is a tax.

    An it is a tax, in fact and should be called in name now that it has been adjudicated. That Democrats want to call it a grilled cheese is simple lying. That it is a tax that is punitive and therefore has penalty characteristics does not alter that it is a tax. If it is not a tax, then it is unconstitutional. If it is not a tax then the victims, I mean, penalized have rights to due process.

  34. rodney dill says:

    @jan:

    However, in the long run it will cost more than a $1000/year

    I read that to mean the cost to each insured person that is subsidizing the uninsured, not the total healthacare cost of the uninsured person. (Maybe you meant that too, I couldn’t tell)

  35. anjin-san says:

    An it is a tax, in fact and should be called in name now that it has been adjudicated.

    Look, we realize that after wasting years on the “unconstitutional” argument against HCR, conservatives are a bit desperate to come up with another raison d’être – hence all the chatter about taxes. But since we actually have pressing business to conduct as a nation, maybe now would be a good time to stop chasing windmills…

  36. anjin-san says:

    However, in the long run it will cost more than a $1000/year … just not right away.

    And you know this… how? Because lots of people in the Foxverse say so?

  37. OzarkHillbilly says:

    @JKB:

    But the law is only Constitutional if it is a tax. An(d) it is a tax, in fact and should be called in name now that it has been adjudicated.

    First of all, As Doug has already noted, the law is not a tax. The mandate is enforced by a tax.

    A tax which, if projections are correct, 99% of Americans will not have to pay. You can argue the semantics all you want, and by all means continue to partake in a pointless discussion, because in the end, as long as a person does not have his/her taxes raised, they don’t care.

  38. jan says:

    @rodney dill:

    “I read that to mean the cost to each insured person that is subsidizing the uninsured, not the total healthacare cost of the uninsured person. (Maybe you meant that too, I couldn’t tell) “

    Sorry, Rodney for any lack of clarity. Yes, I did mean the cost to each insured person in their subsidy to another. The whole mandate funding, how it is politically structured for public consumption, is unsustainable. Since it doesn’t go into effect until 2014, after the election, people won’t be getting the brunt of it’s fiscal impact until after that. It’s like watching a wave in the ocean coming towards you. However, until it hits, there is no damage.

  39. David M says:

    @JKB: Simply put, that is entirely BS. The GOP doesn’t like taxes, and their decision to make the tax/penalty distinction is entirely political. There’s no reason think the tax/penalty distinction reflects anything but the results of a focus group, as the GOP would drop the issue if they didn’t think the confusion over the health care law would help them. The “controversy” reminds me of the death tax nonsense.

  40. sam says:

    @jan:

    The whole mandate funding, how it is politically structured for public consumption, is unsustainable.

    I’m curious. Can you explain to us what you understand the mandate to be?

  41. jan says:

    @David M:

    @anjin-san:

    Yes, you are right that the ACA was presented as the ‘affordable’ care act, with no technical wording of it being free. However, in it’s promises of now supplying HC to everyone, there are intonations of it to the public of being ‘free.’ And, for many people, that is how it is being construed, which is why some doctor offices are receiving calls from people wanting to book their ‘free’ doctor appointments.

  42. Herb says:

    @JKB:

    “But the law is only Constitutional if it is a tax. “

    What do you mean by this? The mandate was ruled constitutional because it’s consistent with Congress’s taxation powers.

    Are you saying that it suddenly becomes unconstitutional if someone (someone other than the SC, that is) declares it’s a penalty? Pretty sure it doesn’t work that way…..

    Bottom line is this….call it what you want, it’s constitutional.

  43. wr says:

    @jan: “Furthermore, the word ‘tax,’ IMO, will jar more people awake, that there might indeed be some financial cost to them, to what was originally touted as ‘free’ medical care”

    Could you please point to one — just one — supporter of the ACA who ever promised (or “touted”) “free medical care”? And if you can’t, will you drop this idiot claim once and for all?

  44. David M says:

    @jan: Those people sound deeply confused about the law, I’m not sure how changing the word “penalty” to “tax” will help. Maybe the GOP can clear things up by talking about death panels, government run health care and “freedom” some more.

  45. jan says:

    @sam:

    The government has made presumptions about people’s behavior in how they will and won’t react to buying HC insurance.

    For one thing they assume only 1% will forgo the insurance and pay the ‘tax’ penalty. However, considering the higher expense of the insurance, the lack of catastrophic coverage being offered, relative to the amount of the ‘tax,’ many think that both individuals and employers will opt out of health insurance plans and instead pay the ‘tax.’ This creates financial problems for both the government and for insurance companies. In order to close any fiscal gap, the ‘tax’ penalty will have to be raised and/or the insurance premiums will have to go up as well, because it’s likely more people will simply wait, insuring themselves when they are facing a medical problem. This happened back in the late 90’s when 8 states, including MA, adopted a similar program, causing insurance companies to leave those states, and creating havoc with insurance costs, free riders, and inundation of ERs.

    Also, no one knows how the medicaid expansion will be played out, now that states have a choice to accept the government’s expansion or not. If they decline it, which 15 states have shown interest in doing, then many of the poor will be left in the lurch, without additional funding to cover the increased health care costs which was supposedly coming from additional medicaid funding.

    It’s a mess.

  46. al-Ameda says:

    @jan:

    However, in it’s promises of now supplying HC to everyone, there are intonations of it to the public of being ‘free.’

    To my knowledge, the only such “intonations” of it being “free” were made by conservatives.

  47. anjin-san says:

    there are intonations of it to the public of being ‘free.’ And, for many people, that is how it is being construed,

    I’m sure that it has nothing to do with how long and hard the right has labored to mischaracterize HCR as “free” health care to support the nonsense socialist meme.

    Nice attempt to walk back your above blatant lie that HCR as “originally touted” as being “free” though…

  48. anjin-san says:

    which is why some doctor offices are receiving calls from people wanting to book their ‘free’ doctor appointments.

    Yes, yes, I am sure “many people” are saying this is happening…

  49. JKB says:

    @Herb: “Bottom line is this….call it what you want, it’s constitutional.”

    But it is constitutional only because the Chief Justice looked beyond the overt assertions of the Congress that the “penalty” was not to be construed as a tax and construed it as a tax in fact regardless of what they called it.

    If it were indeed a “penalty” to enforce the imposition of the mandate under the Commerce clause powers, it would indeed be unconstitutional.

    You see, you are making an error, as Nancy Pelosi said, they had to pass it so we could know what was in it and now we know the “penalty” is only constitutional if it is imposed as a tax. Now that we know, it is foolish to keep calling the punitive tax a penalty in the face of the final determination by the SCOTUS.

    I suppose in the interest of bipartisanship we could call it a penalty tax. This would accurately identify the punitive nature of the fine imposed via the taxing powers.

  50. David M says:

    @jan:

    There will be catastrophic coverage type health care plans offered.

    The problem in the 90s involved states with no mandate at all, and then guaranteed issue did cause problems. A better comparison might be the recent reforms passed by MA. I think it was called RomneyCare, maybe you’ve heard of it? And it now sounds like you support the mandate, to make sure the insurance markets function properly.

    It’s interesting that you see declining the Medicaid expansion as “leaving the poor in the lurch”, but don’t seem to be critical of the GOP for that, as it’s a problem they alone are responsible for.

  51. JKB says:

    @jan:

    I must protest it is not a “‘tax’ penalty,” which would be a punitive measure imposed due to failure to comply with a tax.

    It is rather a “penalty tax,” which is a punitive measure impose due failure to purchase a private product collected as a tax using the taxing powers and avoiding all that unseemly due process.

  52. sam says:

    @jan:

    For one thing they assume only 1% will forgo the insurance and pay the ‘tax’ penalty. However, considering the higher expense of the insurance, the lack of catastrophic coverage being offered, relative to the amount of the ‘tax,’ many think that both individuals and employers will opt out of health insurance plans and instead pay the ‘tax.’

    For why all of that is flatass wrong, see Drum, Buying Insurance vs. Paying a Fine: What’s the Tradeoff?

    What follows is back-of-the-envelope stuff, but I think it’s in the right ballpark. Let’s take a family of four where the policyholder is age 35 and has an income of $40,000. How much would insurance cost them? According to this handy calculator from Kaiser, here’s what that family would have to pay (converted into a monthly premium):

    Premium cost: $925
    Federal tax credit: $760
    Net cost of policy: $165

    However, this overstates things because it’s based on the cost of a “silver” policy. But you don’t have to buy a silver policy. You can pay more and get a gold or platinum policy, and more importantly, you can pay less and get a bronze policy. Bronze policies don’t provide great coverage, but they do provide the basics and they also cover health emergencies. It’s a reasonable option for someone who just can’t afford more. By my rough calculation, a bronze policy would cost about $125 less than a silver policy. This means that the net monthly premium for our family of four would be about $40. That’s not much — and it’s half the cost of the fine.

    But how about a family of four with an income of $50,000? After subsidies, their cost for a bronze policy would probably come to about $166 per month. That’s more than the fine ($166 vs. $100) but not a lot more. How many families earning $50,000 would forego health insurance for a net cost of $66 per month? Not too many, I’d guess, even if the insurance policy is mediocre.

    As for families making more than $50,000, hardly any of them are uninsured in the first place. This paper estimates only about 1.6 million uninsured adults with incomes consistently above $50,000. It’s just not a big number.

    You can play with these numbers endlessly, and if you choose the worst possible set of circumstances you can always come up with an example or two of people who would be forced to pay a fair amount of money for health insurance they’d rather not have. But here are the basics for a family of four:

    Under $30,000, families qualify for Medicaid and pay nothing for insurance.
    Under $37,000 or so, most families can buy a bronze policy for free.
    Between $37,000 and $45,000, the cost of a bronze policy is quite small, and certainly less than paying the fine.
    Above $45,000, the cost of a bronze policy is a bit more than the fine.
    Above $50,000, the cost of a bronze policy is significantly more than the fine, but there aren’t very many uninsured families in this category.

    The numbers work out differently for single people, but singles under 30 also have the option of buying only catastrophic coverage. We don’t know yet how much policies like this are going to cost, but certainly substantially less than a bronze policy. For most under-30s, this means they have the option of free or nearly free coverage all the way up to a fairly high income level.

  53. Nikki says:

    Also, no one knows how the medicaid expansion will be played out, now that states have a choice to accept the government’s expansion or not. If they decline it, which 15 states have shown interest in doing, then many of the poor will be left in the lurch, without additional funding to cover the increased health care costs which was supposedly coming from additional medicaid funding.

    And this is the fault of the federal government and PPACA how?

  54. Herb says:

    @JKB:

    “If it were indeed a “penalty” to enforce the imposition of the mandate under the Commerce clause powers, it would indeed be unconstitutional. “

    We’re kinda beyond the “ifs.” If I was born a month later, I’d be a Sagittarius. If Harriet Miers or Alberto Gonzales was confirmed….if we lost WW2….if the Blair Witch Project was real.

    Where does it end? Not here apparently: “If the case is upheld by the SC, then the right will shut up about it.”

  55. @jan:

    Sorry, Rodney for any lack of clarity. Yes, I did mean the cost to each insured person in their subsidy to another. The whole mandate funding, how it is politically structured for public consumption, is unsustainable. Since it doesn’t go into effect until 2014, after the election, people won’t be getting the brunt of it’s fiscal impact until after that. It’s like watching a wave in the ocean coming towards you. However, until it hits, there is no damage.

    Explain this to me, because it really seems backwards. As Mitt Romney explained, several times in the past, when more free riders buy insurance the insurance companies become more solvent, not less.

    You seem to be saying that with more people buying their own medical insurance, there will be less money for health care. Huh?

  56. JKB says:

    @Herb:

    You seem very confused and you comment adds nothing of value to the discussion. No one is arguing that PPACA is unconstitutional anymore as long as the “penalty” is a tax or a “penalty tax” if you will. The act is unconstitutional if the insistence is that the monies exacted for failure to buy health insurance are a penalty imposed as a punitive measure rather than an exercise of the taxation powers.

    It’s all very confusing, perhaps Pelosi or Obama can explain it to you. Although they do seem to be creating grounds for appeal of the decision by their insistence the penalty tax isn’t a tax.

  57. Tsar Nicholas says:

    Whatever it is it’s a pretty big stinking pile of crapola.

    True story:

    So this week in light of the SCOTUS ruling our company sat down to determine what to do about our group health insurance renewal.

    One of the many things that doesn’t get reported about Obamacare (for obvious reasons) is that the law with rare exceptions lets employers pay as little as 60% of employee premiums without losing compliance status. Thing is, most employers for decades have been paying way over 60% of employee premium costs (we’ve always paid 90%), but now with Obamacare in place overall premiums have and will continue to skyrocket and compliance costs also drastically will increase.

    What do you suppose will be the result?

    Not surprisingly we’ve decided to cut the share we pay towards employee premium costs. We’ve also decided to increase the waiting period for health coverage, from 60 days to 90 days. (In addition to Obamcare the “Obama-COBRA” regulations are another key reason for that second point.) We’ve also decided to convert a number of workers from full time to part time and to discontinue entirely their health insurance coverage. Regarding the latter item we’re not worried about losing “grandfathered” status under Obamacare, because the law does not define what sort of plan-related changes obviate grandfathered status and in any event that issue only is germane to minor requirements.

    In other words, our company’s employees will have worse coverage packages post-Obamacare than they did pre-Obamacare. And you can bet your bottom dollars that we’re not the only company that’s heading down those paths. Far from it.

  58. Herb says:

    @JKB:

    “The act is unconstitutional if the insistence is that the monies exacted for failure to buy health insurance are a penalty imposed as a punitive measure rather than an exercise of the taxation powers.”

    Actually the act is unconstitutional if the Supreme Court rules it so. They didn’t. There’s a whole process you’re ignoring here, which –as I pointed out previously– has already happened.

    Also, there is no appealing SC rulings. It’s the Supreme Court. They hear the last appeal.

  59. David M says:

    @Herb: You’re missing JKB’s point that it might hurt the Democratic Party or Obama to call it a tax rather than a penalty. He claims it’s confusing, but when has the GOP ever cared about discussing the actual reforms rather than what the GOP thinks will scare voters. JKB calls it a tax because that is the GOP approved message, even if he claims it’s coincidence that he’s doing exactly the same thing all the pro-GOP blogs and politicians.

  60. Wayne says:

    OzarkHillbilly

    Because without the mandate\tax the rest of the law is unsustainable. So without calling it a tax that part of the law would not be constitutional which mean most of the rest of the law could not be sustain.

    You are claiming that a many of the Jim Crow were not unconstitutional just the one little part pertaining to discrimination.

    If it doesn’t matter what we call it then let us call it a tax. I suspect to many of you, it is only not important as long as we don’t call it a tax.

  61. john personna says:

    @JKB:

    The act is unconstitutional if the insistence is that the monies exacted for failure to buy health insurance are a penalty imposed as a punitive measure rather than an exercise of the taxation powers.

    You made that up.

  62. john personna says:

    @Wayne:

    So … the word of the day is unsustainable?

    I think to really make it fly you need more than a what if. What if the law wasn’t written the way it was … What if the Supreme Court hadn’t ruled the way it did ..

    Man, this is all so weak. If you want to make a strong case against ObamaCare, make it for bad consequences under the current law, with the current decision.

    Make the case that more healthy people going out to get health insurance is a bad thing.

    We think people should have insurance before they get sick, right? Because if they wait, they have a pre-existing condition and are refused. That is, without this law and the mandate that makes it sustainable.

  63. anjin-san says:

    @ Tsar

    our company

    Are you an attorney this week, or an oil company executive? It’s hard to keep track of all your hats.

    Also, do you call our co-workers zombies?

  64. anjin-san says:

    they do seem to be creating grounds for appeal of the decision

    Have you suffered a blow to the head recently?

  65. wr says:

    @Tsar Nicholas: In other words, your company is using the ACA as an excuse to screw their employees in a down economy. Bravo. Truly admirable people you claim to work for.

  66. JKB says:

    @john personna:

    I made that up in that I formed the words into the sentences that relayed the idea. Bu the formation was informed by the actual opinion of the Supreme Court.

    From SCOTUSblog:

    Politicians and pundits are deeply bothered about whether the new government-imposed penalty for failure to obtain health insurance by 2014 is a tax or is not a tax. As is often true, that political debate will have no noticeable legal consequences; it might change some votes. The reality is that it is a tax, because the Supreme Court said so last week; otherwise, it is unconstitutional.

  67. @JKB:

    I misunderstood then. I thought you were saying that some choice in the future, about enforcement, could change constitutionality.

    I certainly agree with “The reality is that it is a tax, because the Supreme Court said so last week”

  68. JKB says:

    I suppose there is some way they could impose the penalty tax that would negate it as a tax calling it into constitutionality but I couldn’t say how.

    What I find interesting in this case is that we so often hear about the SCOTUS going back to Congressional intent, examining statements, etc. to do so. In this case, Roberts went in the exact opposite direction by completely ignoring Congressional and Presidential statement that in no uncertain terms was this mandate “penalty” a tax. Apparently, regardless of the Democrats in Congress and Obama’s intent, they voted in a tax.

    They somehow stumbled and that tax slipped right in when they swear all they intended was to slap the People on the backside. Nothing to do now but close our eyes and think of unicorns.

  69. @JKB:

    That never really surprised me at all. Judges (and ideally lawyers) are supposed to read the law, and rule entirely on what they find within. Statements, interviews, etc., are not “law.”

  70. BTW, for a really good breakdown on who pays what under this law, see:

    The ObamaCare Tax on the Middle Class

    It takes some reading, because people fall into different buckets … but I’d say the bottom line is that for most of us, this is no big. We have insurance.

    (I have insurance, and no health problems, but I’ve worried about moving to a new state because I’m on statins. Under previous law that is enough to make me uninsurable. Just “high cholesterol” has been treated as a “preexisting condition.” That even though I have low blood pressure and have never had a cardiac event of any kind. So for me, a healthy person, this law is a big boon.)

  71. @JKB:

    They somehow stumbled and that tax slipped right in when they swear all they intended was to slap the People on the backside. Nothing to do now but close our eyes and think of unicorns.

    Yes, but the point is the structure of the tax, penalty, etc. was the same before the ruling and after. And it was always a function of the tax code. As such, the point of the post (and JP’s post) is that the tax/penalty/whatever argument is over semantics, i.e., what to call something that already exists. Roberts did not create the mechanism in question, the congress did.

    One of the odd things about the debate is that a lot of people are pretending that Roberts creates the mechanism in question (either that, or they really don’t understand the mechanism in the first place).

  72. And yes: the politicians at the time didn’t want to call it tax, but that’s politics, yes?

    “Tax” is practically The Policy That Will Not Be Named in many quarters.