As the nation awaits the U.S. Supreme Court’s decision on Obamacare’s future, Democrats are gearing up to revive the tax penalty on people who fail to buy health insurance.
In California v. Texas, 20 states argued the Affordable Care Act (ACA) is unconstitutional because the law’s individual mandate/tax penalty for uninsured persons is no longer in effect. Congress eliminated the 2.5 percent tax penalty to zero in 2017 under the Tax Cuts and Jobs Act. The states say there is no provision in the ACA against “severability,” which protects the entire law when a component is removed.
After Congress reduced the penalty to zero, California, Rhode Island and Vermont passed health care mandates into law, with all but Vermont carrying a monetary penalty. Massachusetts has had an individual health care requirement since 2006, but from 2014-2018 removed the tax due to the federally issued mandate. It was reinstated in 2019. New Jersey and the District of Columbia created state-based coverage mandates in 2018. Pending the U.S. Supreme Court decision, blue states and the District of Columbia are maneuvering to institute their own health insurance mandates.
The Biden administration issued a letter in February arguing for the constitutionality of the ACA, regardless of the tax penalty reduction. The conservative caucus of House Republicans, the Republican Study Committee, intends to block the mandate if the ACA remains intact.
Penalties Hurt Health Care
Polls have shown the mandate to be widely unpopular with the American public. A 2016 Kaiser Family Foundation tracking poll found 63 percent of those surveyed were not in favor of the mandate. A YouGov poll from February 2017 found that two-thirds of Americans wanted a repeal of the mandate. Historically polarizing and pre-existing Obamacare, the mandate relies heavily on the “healthy” populace to even out cost-sharing in the market.
In any case, the mandates don’t fix health care, writes John Goodman, the co-publisher of Health Care News, in his book, “New Way to Care.”
“In 2016, 6.5 million people paid a tax penalty rather than purchase private insurance and roughly 28 million people remained uninsured,” Goodman writes.
Because insurers in the Obamacare exchanges are still required to cover everyone and rate everyone the same regardless of how sick they are, “that may explain why there has been very little increase in the number of people with private insurance over the past decade,” Goodman writes.
Ashley Bateman (bateman.ae@googlemail.com) writes from Virginia.