The Supreme Court called it a tax. Mitt Romney’s calling it a penalty. Chris Christie’s calling it both.
Call the Affordable Care Act’s mandate whatever you like—but what will it actually cost the uninsured? Jansing & Co.’s Richard Lui broke down the numbers (video after the jump).
The Congressional Budget Office estimates that approximately 4 million Americans—1.3% of the population—will not buy health insurance. How much the health care law will cost them depends on their income:
There’s no penalty for those making less than $9,500 a year.
“Above that,” Lui reports, “Those penalties will go up, but they will never go greater than 2½% percent of income.”
In fact, that maximum penalty will be phased in. In 2014, the most you’d pay for not having health insurance is 1% of your taxable income; 2% in 2015; and after 2016, the maximum penalty will be “increased annually by the cost-of-living adjustment,” according to the Kaiser Family Foundation.
So which is makes less of a dent in your wallet—the penalty or the plan?
The average employer-funded plan costs about $2,200 a year. So for those making $100,000 or less, it’s technically cheaper to go with the penalty. As for plans not funded by an employer, those average about $4,300 a year.
But as Lui pointed out, choosing not to buy health insurance could cost you more in the end: “A broken leg—those medical costs can be from thousands to tens of thousands of dollars.”
Not everyone will be penalized for opting out of health insurance. Exemptions will be granted for religion reasons, financial hardship, American Indians, those without coverage for less than three months, undocumented immigrants, and incarcerated individuals.
MSNBC's Richard Lui explains how the health care law's insurance mandate will impact Americans' who choose not to purchase health insurance.
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Excellent and highly informative segment. I have no objection to the penalty, as long as the proceeds go to cover the medical claims of the uninsured and will used to offset cost shifting by providers. We'll see how this works out - in theory, it should, but, we are talking about a rather huge guessing game. Expect future refinement.
This was an excellent, and, very informative segment. I have no problem with this penalty, so long as the proceeds go towards covering the medical costs of the uninsured. This would include medical providers reducing their cost-shifting, to the insured, in a proportional manner. Since this would be a big time guessing game, I will assume that it will work OK, at least as long as everyone knows that we should fully expect refinements.
OK, so I have a lack of patience to wait for a post to register from Facebook to Twitter. I appologize for my shortcomings - I have enough for at least two people. ☺
Quite a huge gap between $9,500 and $50,000, wouldn't you say? What's to stop those earning between those two figures from going with the cheapest alternative - paying the TAX. Then of course the whole plan achieves nothing it set out to do, which was namely to help those very people get coverage. And just what will that new tax revenue be used for? I see another slush fund for Congress to raid when it needs to pay for something else, just like they do with Social Security funding.
The "Penny Health" is quite popular in California and New York. For example it offers the low income health plan. Also offers health insurance for individual with pre-exisiting conditions.