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FACT: Obamacare Is NOT A Tax If You Already Have Health Insurance, And Even Then...

  • Category: Health Care Reform
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Commentary
By Gary Kopycinski

The GOP has found a partial response to the Affordable Care Act, a.k.a. Obamacare, now that it's consitituional.

They're calling it a tax.

That's not true, at least for the majority of Americans who already have health care insurance. And then some.

Chief Justice John Roberts rightly decided that the Affordable Care Act's "penalty" for those who can, but choose not, to purchase health insurance, actually amounts to a "tax," as it will be collect by the IRS.

That is the key.

There are millions among us who can but choose not to purchase health care insurance. When they get sick, we, the American taxpayers, get stuck with much of the tab.

They are, in large part, the reason health care premiums for the rest of us are so high.

This is all the Affordable Care Act will do (emphasis added):

If you can’t afford insurance or you’re a small business that wants to provide affordable insurance to your employees, you’ll get tax credits that make coverage affordable. But starting in 2014, if you can afford insurance and you choose not to purchase it, the taxpayers will no longer subsidize your care for free. The Court’s ruling today allows Congress to hold the projected 1% of Americans who will be able to afford health insurance but will choose not to buy it responsible for that choice.

The 1% of Americans who can afford health insurance but choose, instead, to not purchase health insurance, will now have to pay.

As well they should.

Here is what the Affordable Care Act already does (emphasis added):

  • Insurance companies no longer have unchecked power to cancel your policy, deny your child coverage due to a pre-existing condition, or charge women more than men.
  • Over 86 million Americans have gained from coverage of preventive care free of charge, like mammograms for women and wellness visits for seniors.
  • Nearly 13 million Americans will receive a rebate this summer because their insurance company spent too much of their premium dollars on administrative costs or CEO bonuses.
  • The law has already helped 5.3 million seniors and people with disabilities save an average of over $600 on prescription drugs in the “donut hole” in Medicare coverage.
  • The law’s provisions to strengthen and protect Medicare by fighting fraud will continue.
  • The law has helped 6.6 million young adults who have been able to stay on their parents’ plans until the age of 26, including 3.1 million young people who are newly insured.

The GOP wants to repeal all of the above provisions already in effect because of the law, plus the other benefits soon to arrive.

For example:

  • Tax Credits for Middle Class Families and Small Businesses: Millions of Americans will soon be eligible for tax credits to ensure that their health insurance is affordable. Under today’s ruling, having health insurance is and will continue to be a choice. If you can’t afford insurance or you’re a small business that wants to provide affordable insurance to your employees, you’ll get tax credits that make coverage affordable.
  • Support for State Implementation of Affordable Insurance Exchanges: With the uncertainty of the Court decision behind us, we will step up our work with States to implement Affordable Insurance Exchanges. Exchanges are new marketplaces, starting in 2014, that will allow individuals and small businesses to compare and choose private health plans. Each State will take the lead in designing its own menu of options.

Mitt Romney will have to explain why so much of this, the Affordable Care Act, was actually suggested by the GOP for the nation, written into law (in large part) by Massachusetts Governor Mitt Romney, is not, well, good for America.

But it is good for America.

And all Americans.

The Affordable Care Act is a "tax increase" that will have zero effect on the tax bill of anybody who already has insurance, which is to say about 85% of Americans. As for those who don't have insurance, a majority of those people will either be eligible for Medicaid (and won't be required to purchase insurance) or will qualify for subsidies to purchase insurance.

Those who will be affected by the mandate will, overwhelmingly, be a relatively small number of healthy young people who are currently trying to stay out of insurance markets because they don't think they'll get sick.

Here's the rub, or the necessary evil, if you will:

More healthy young people in the risk pool means lower premiums (or smaller increases), for all.

Moreover, if you want to have provisions preventing insurers from denying people coverage due to pre-existing conditions, then you need to have a way of getting healthy young people into the risk pools.

If you don't have an incentive for those people to purchase insurance, then the risk is that people will stay out of pools until they get sick. If that happened, it would drive up premiums (as it already does), encouraging more healthy young people to exit the insurance market... and thereby driving up premiums even further, and so on.

This is known as "adverse selection".

(Kudos to Minh-Quan Hussein Nguyen for assistance with this analysis.)

I generally recuse myself from making predictions.

However, based on the many opinions and analyses I've heard today, I predict the Affordable Care Act will stand. Furthermore, it will pave the way for a more healthy health care system in the United States of America (No, we are not the first in any respect here).

The Affordable Care Act is hardly a tax, not for any who have health insurance, nor for the very poor.

Unless you choose to freeload off the rest of us.

And now, you will have to pay.

To do your part.

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