The Senate Finance Committee announced today that it would add to the Senate tax reform bill a zeroing out of Obamacare’s individual mandate surtax, in essence repealing the mandate. This is a big tax cut aimed squarely at America’s middle class.
The mandate is a tax which punishes those who can least afford it
Obamacare’s individual mandate is enforced by the collection of a surtax on income. Failure to purchase Obamacare insurance triggers the surtax.
In 2017, the surtax is equal to the greater of:
- 2.5 percent of adjusted gross income, or
- the dollar penalty
The dollar penalty is $695 for every adult in the household, plus $347.50 for every child in the household, with a household maximum of $2085.
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Repealing Obamacare’s individual mandate might not be the devastating blow to health insurance markets that supporters of the law fear.
Because the tax penalty for not having insurance is far less costly than what many Americans would have to pay for coverage, many have chosen to take the fine. Eliminating it, therefore, might not radically change behavior — or fulfill the dire predictions of spiking premiums and vast increases in uninsured people that economists, health providers and politicians once predicted.
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Senate Republicans have included a repeal of Obamacare’s individual mandate in the latest version of their tax reform bill. Some Democrats have reacted by claiming that the repeal of the mandate is actually a tax increase, and that mandate repeal “kicks” people off coverage they didn’t want to buy. Welcome to 2017.
The “mandate repeal is a tax hike” argument seems ludicrous on its face. Why would repealing a tax—the fine that you pay if you find Obamacare’s coverage unaffordable—represent a tax increase?
The “tax hike” talking point comes from two tables supplied today by the Joint Committee on Taxation, the Congressional agency that estimates the fiscal impact of tax legislation. (Its work is often mistakenly credited to the Congressional Budget Office, which also relies on JCT work for tax policy.)
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This month marks the start of the ACA’s fifth open enrollment period for individuals who purchase health plans on their own. The November Kaiser Health Tracking Poll finds three in ten of the public saying they haven’t heard anything at all about the current open enrollment period. Three in ten Americans say they have heard “a little” while four in ten say they have heard either “some” (21 percent) or “a lot” (18 percent). About half of the public (45 percent) say they have heard less about open enrollment this year compared to previous years while four in ten (38 percent) say they have heard “about the same amount.
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Consumers here at first did not believe the health insurance premiums they saw when they went shopping for coverage this month on HealthCare.gov. Only five plans were available, and for a family of four with parents in their mid-30s, the cheapest plan went typically for more than $2,400 a month, nearly $30,000 a year.
With the deadline for a decision less than a month away, consumers are desperately weighing their options, dismayed at the choices they have under the Affordable Care Act and convinced that political forces in Washington are toying with their health and well-being.
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Former President Barack Obama and his advisers claimed that their 2010 health insurance law would create incentives to provide better and more efficient patient care. A new study suggests that one of their bright ideas has since gone disastrously wrong.
This week the Journal reports:
The Affordable Care Act required Medicare to penalize hospitals with high numbers of heart failure patients who returned for treatment shortly after discharge. New research shows that penalty was associated with fewer readmissions, but also higher rates of death among that patient group.
The researchers said the study results, being published in JAMA Cardiology, can’t show cause and effect, but “support the possibility that the [penalty] has had the unintended consequence of increased mortality in patients hospitalized with heart failure.”
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Republicans are right to want to repeal the mandate that fines Americans who don’t buy health insurance. Their dual motive is to repeal the most loathed part of the Affordable Care Act as well as to make tax reform comply with the Senate Byrd Rule that dictates no deficits outside a 10-year budget window. Some Americans no doubt would decide not to buy insurance if they aren’t hit with a tax, but that would be their choice. Republicans aren’t denying them anything. No other ObamaCare rule or mandate would be changed, and no benefit formula would be altered. Anyone who still wants an ObamaCare policy could still buy it.
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As Republicans and the Trump administration continue trying to chip away at the Affordable Care Act, the Internal Revenue Service has begun, for the first time, to enforce one of the law’s most polarizing provisions: the employer mandate.
Thousands of businesses — many of them small or midsize — will soon receive a letter saying that they owe the government money because they failed to offer their workers qualifying health insurance. The first round of notices, which the I.R.S. began sending late last month, are being mailed to companies that have at least 100 full-time employees and ran afoul of the law in 2015, the year that the mandate took effect.
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Senate Republicans have added the repeal of Obamacare’s individual mandate to the latest version of their tax bill, with several key swing votes saying they’re open to the idea.
Late on Tuesday, the chairman of the Senate Finance Committee, Orrin Hatch of Utah, released a new bill that would eliminate the mandate’s fines beginning in 2019. The addition was discussed at a closed-door party lunch meeting earlier in the day, and several Republican senators said no one spoke out publicly against repealing the mandate.
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Bishop Frank J. Dewane of Venice, Florida, Chairman of the U.S. Bishops’ Committee on Domestic Justice and Human Development, issued a statement in June about a discussion draft of health reform legislation that was then before the Senate, the Better Care Reconciliation Act. He praised its life protections: “The Bishops value language in the legislation recognizing that abortion is not health care by attempting to prohibit the use of taxpayer funds to pay for abortion or plans that cover it. While questions remain about the provisions and whether they will remain in the final bill, if retained and effective this would correct a flaw in the Affordable Care Act by fully applying the longstanding and widely-supported Hyde amendment protections. Full Hyde protections are essential and must be included in the final bill.”
The leadership in the Senate, the House, and the White House know that any future health reform legislation must contain these strong life protections.
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