WASHINGTON (AP) — 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.
The Supreme Court
upheld Obama's law as constitutional in a 5-4 decision this summer,
finding that the insurance mandate and the tax penalty enforcing it fall
within the power of Congress to impose taxes. The penalty will be
collected by the IRS, just like taxes.
The budget office said the penalty will raise $6.9 billion in 2016.
The
new law will also provide government aid to help middle-class and
low-income households afford coverage, the financial carrot that
balances out the penalty.
Nonetheless, some people might still
decide to remain uninsured because they object to government mandates or
because they feel they would come out ahead financially even if they
have to pay the penalty. Health insurance is expensive, with
employer-provided family coverage averaging nearly $15,800 a year for a
family and $4,300 for a single plan. Indeed, insurance industry experts
say the federal penalty may be too low.
The Supreme Court also
allowed individual states to opt out of a major Medicaid expansion under
the law. The Obama administration says it will exempt low-income people
in states that opt out from having to comply with the insurance
requirement.
Many Republicans still regard the insurance mandate as unconstitutional and rue the day the Supreme Court upheld it.
However, the idea for an individual insurance requirement comes from Republican health care plans in the 1990s.
It's
also a central element of the 2006 Massachusetts health care law signed
by then-GOP Gov. Mitt Romney, now running against Obama and promising
to repeal the federal law.
Romney spokeswoman Andrea Saul said Wednesday the new report is more evidence that Obama's law is a "costly disaster."
"Even
more of the middle-class families who President Obama promised would
see no tax increase will in fact see a massive tax increase thanks to
Obamacare," she said.
Romney says insurance mandates should be up
to each state. The approach seems to have worked well in Massachusetts,
with virtually all residents covered and dwindling numbers opting to pay
the penalty instead.
