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Tax penalty to hit nearly 6M uninsured people
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.
"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 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.
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.
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Tax penalty to hit nearly 6M uninsured people
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