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A Taxable Penalty

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Created: 30 June, 2012
Updated: 13 October, 2022
6 min read

Is it a tax or is it not?  The Supreme Court has said yes and thus is constitutional.  In 2009, President Obama said that it wasn't repeatedly.  Republicans said that it did not fall under the Commerce Clause for the Congress to pass such legislation, and therefore, wasn't constitutional.  There have been so many different angles coming at us these past couple of days over the Affordable Care Act ("Obamacare"), that one's head might start spinning in circles if it came to making sense of any of it.

President Obama did in fact say in 2009 on "This Week with George Stephanopoulis" on ABC that the Affordable Care Act wasn't a tax.  Democrats in Congress even made the same point.  But that came down to semantics.  The word used throughout the legislation was 'penalty,' and it only applies to those that don't have health insurance.  Knight professor of Constitutional Law and the First Amendment at Yale Law School, Jack M. Balkin, wrote the following in an op-ed for CNN:  "If the Affordable Care Act imposed a mandate, it was ordering people to buy insurance, and nobody likes to be told what to do by the government. But if it was a tax, then it actually gave people a choice: Pay a small tax, or buy health insurance."  Republicans like to make the charge that the Affordable Care Act is government-run/socialist healthcare, and they've managed to stick to that message and get people worked up over it (hence how we now have the Tea-Party wing of the Republican Party).  Most First World nations (and others) actually have government-run/socialist healthcare, and one should go look those countries up before making such a claim here.  So here is my question to this.  How is the Affordable Care Act government-run/socialist healthcare when people still have the right to choose which healthcare provider and plan they wish to go with?  The government isn't forcing us to buy healthcare from itself since there is no public option.  For those on Medicare and Medicaid, which are government run healthcare programs, this law doesn't really concern them.  It also doesn't affect those with company healthcare.  It mostly goes after those that buy healthcare on their own... whether they choose to or have to.  It does have far bigger reaches such as covering pre-existing conditions, covering dependents until they are 26, etc., etc.  (click here for more information)  If one were buying individual health insurance, they will now be able to enter into an exchange that will allow them to be like a company with bigger numbers for better prices rather than just being one person.  It's often the lone individual that gets stuck with higher premiums.  The consumer still gets to choose which health insurance they wish to purchase or even choose not to and pay the penalty.

"The Congress shall have power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States; [...]" Article I, Section 8 of the US Constitution

So now that it has been determined that the Affordable Care Act was essentially taxing people that didn't have health insurance (despite the term 'penalty' being used), it now just needed to justified by providing for the general welfare.  In the end, five justices of the Supreme Court ruled that it did and therefore fell under the powers of Congress.  Again, I go back to the op-ed on CNN from Jack M. Balkin...

"The answer to that question was also pretty clear. Congress wanted to give all Americans a new set of consumer protection rules that prevented insurance companies from denying coverage for pre-existing conditions and imposing lifetime caps on coverage. The only way to make those reforms work, Congress thought, was to get more people in the national risk pool. Hence, Congress decided to give uninsured people a nudge instead of a direct order: It taxed them if they didn't buy insurance."

With the Supreme Court ruling, the Affordable Care Act is now the legal law of the land... despite where any of us stand on the issue.  The only way it can be repealed is by an act of Congress... which Republicans are trying to do.  Presumptive Republican presidential nominee Mitt Romney and other Republicans are saying that Affordable Care Act will add trillions to the deficit.  This has been rated as False by Politifact.  They went to the non-partisan Congressional Budget Office for their official numbers.  The CBO said that with the passage of the legislation, it would lower the deficit by $124 billion over 10-years, and that repealing it would increase the deficit by as much as $210-billion over 10-years.  The CBO isn't perfect with it's calculations.  It even admits that it's hard to predict future numbers since there are many variables that can make them go up and down.  There is one additional stipulation.  These numbers were crunched before the Supreme Court ruling, which did make one decision that could affect them.  The court ruled that though the federal government could give the option for states to accept (or not) the new Medicaid funding, the federal federal government could not withhold all Medicaid to the states if they refused... that it could only withhold future payment increases, but not what was already agreed to when the federal government and the state governments entered into the Medicaid program.  The CBO is currently crunching the numbers to see how the ruling will affect the overall numbers.

The Democrats, and President Obama, celebrated the ruling on Thursday while Republicans fussed over it.  And though the moods were celebratory on the left, I'm quick to remember that nothing energizes the right more than "Obamacare."  This November will be the endgame.  If the Republicans can't win the presidency and both houses of Congress by big enough margins, then the Affordable Care Act will be here to stay.  Only time can tell if the legislation will go down as a triumph or a failure... no matter how November goes.  In the past, we've seen bad legislation be popular and good legislation be unpopular.  For now, the shock is wearing off, and voting populace is turning now to more pressing matters... jobs and the economy, despite Republican efforts to keep healthcare at the top.  It's hard to say how this will play out in the years to come, but it will take an educated populace to get through all the partisan rhetoric.

"You can fool all the people some of the time and some of the people all the time, but you can't fool all of the people all of the time." Abraham Lincoln~

SIDENOTE:

According to a new Gallup poll, Americans are evenly divided as to whether they agree with the Supreme Court decision 46% to 46%.  Approximately 80% of Democrats agree compared to 45% of Independents and 13% of Republicans.

LINKS:

Washington Week (PBS) - Friday, June 29, 2012

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