Although the easiest answer to the question is “it’s both”, the semantic games being played by the White House in response to the Supreme Court’s finding that the individual mandate prescribed by the Patient Protection and Affordable Care Act (aka “ObamaCare) is only constitutional as a tax under federal law leads us to try to settle the dispute today.
Under President Obama’s health care law, people who do not have health insurance coverage either through their employer or on their own will have to pay the U.S. government an amount of money that is based upon their income, as indexed to the poverty income threshold that applies for their household. So, right off the bat, people with higher incomes will have to pay more than people with lower incomes, just like they do under the U.S.’ progressive income tax regime.
Meanwhile, people who do have health insurance coverage either through their employer or on their own will not have to pay the U.S. government any money for not having health insurance. So it would seem that the federal law’s individual mandate is simply a penalty imposed upon people without health insurance.
The problem with that, to this armchair legal analyst’s way of thinking, is that it would violate the due process clause of the U.S. Constitution, as expressed in the fifth and fourteenth amendments of the Constitution, which requires the laws of the U.S. to apply equally to everyone. To be constitutional, the individual mandate must be a tax that everyone in the United States is required to pay.
As for why only those who do not have health insurance coverage will be the only ones having to pay the tax, that’s because the federal government, under the ObamaCare law, is effectively providing those who do have health insurance coverage with a tax credit in the exact amount of the tax they would otherwise have to pay. Those individuals without health insurance, who have nothing to claim against the tax, get stuck with a higher tax bill.
That’s really what will make it feel like a penalty.
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libertarian jerry says:
As far as I can see the Constitution has been so twisted,turned,spun, Amended and interpreted to the point that it is no longer objective law,but whatever the Power Elite wants it to be. Its only a meaningless shell of what the founders envisioned. And so the bedrock of our Nation,the Constitution,has been left on the shelf to gather dust while,at the same time, we have become a Nation of Serfs. We have been taxed,numbered,recorded and cataloged to the point that our privacy,along with our Liberty, is a thing of the past. The Supreme Court,as usual,has managed with the ACA,as they did with the Income Tax and The Social Security Act,to pound a square peg into a round hole.
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Disregarding the constitutionality of taxing some but not all for the moment, I’m curious as to why Obamacare isn’t being re-written & submitted as a new Bill. The present law, the one the Court was reviewing, supposedly had nothing about taxes in it. That was stressed over & over by the Administration. If that’s the case, why isn’t it being re-written to include the tax? [Then, of course, it would have to make its way through Congress again. With the tax provision, it might not pass into law.]
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so...what’s cheaper...insurance or paying the tax/penalty...seeing as I don’t have insurance...seeing that I don’t...it’s my only consideration...as you see
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I do not understand your statement “the federal government is effectively providing those who do have health insurance with a tax credit in the exact amount of the tax they would otherwise have to pay.”
I was under the impression that the tax credit was graduated, dependent on family income, up to around $88,000 a year.
Those with lower incomes pay no more than 9.5% of their income for premiums.
The tax, as I understand it, is a flat amount or 2% of income, whichever is higher. So, how can the tax be the same amount as the credit?
In regards to whether or not this is a tax, I am comparing the way taxes were perceived in the passage of Social Security. In that case, the payments were deemed taxes, and thus constitutional, for the payments went to the Treasury’s general fund, like all other taxes (not directly to the trust fund). In addition, the taxes were for the “general welfare,” for no citizen could claim his contributions supported his eventual payments.
In the case of taxes and the ACA, it seems to me the major beneficiary of whatever income is raised are the health insurers, who will receive millions of dollars in subsidies. How do these subsidies support the general welfare? While the “taxes” do go to the Treasury’s general fund, it is merely a convenient conduit to pass along the subsidies directly to the insurers.
Since when did insurers equate with the general welfare?
Don Levit