First off, it is a tax. The Supreme Court said the individual mandate is only legal under the Congress’s power to tax. So, stop the nonsense and call it what it is – A TAX!
Now, let’s move onto the numbers for this tax. According to the original estimates provided by the CBO, the cost of implementing Obamacare was $940 billion over 10 years (2010-2019). Later estimates had that number ballooning to $1.76 trillion over ten years (2012-2022). Then there are some predicting the cost for 10 full years of Obamacare at more than $2 trillion (2014-2023).
But, let’s go with the Democrats’ costs of $940 billion – since it is the lowest of the three. Or as James Clyburn (D-SC), the majority whip at the time, put it — “We’re absolutely giddy over the great news we have gotten from CBO…”
To quote Nancy Pelosi – “We love their number…”
So, it seems that $940 billion over ten years is the number any diehard supporter would quote you about the costs of Obamacare. That equals an average cost of $94 billion dollars a year for 10 years.
How is this going to be paid for should be the most pressing question on most people’s mind at this point? The individual mandate tax is the most well-known option. From the law itself:
If a taxpayer who is an applicable individual, or an applicable individual for whom the taxpayer is liable under paragraph (3), fails to meet the requirement of subsection (a) for 1 or more months, then, except as provided in subsection (e), there is hereby imposed on the taxpayer a penalty with respect to such
failures in the amount determined under subsection (c).
So, in English, if you go a month without having insurance, you will be taxed for doing so. How much is now the question? From the law:
‘‘(1) IN GENERAL.—The amount of the penalty imposed by this section on any taxpayer for any taxable year with respect to failures described in subsection (b)(1) shall be equal to the lesser of—
‘‘(A) the sum of the monthly penalty amounts determined under paragraph (2) for months in the taxable year during which 1 or more such failures occurred, or ‘‘(B) an amount equal to the national average premium for qualified health plans which have a bronze level of coverage, provide coverage for the applicable family size involved, and are offered through Exchanges for plan years beginning in the calendar year with or within which the taxable year ends.
So, what does that really mean? It means that you will pay the total tax for each month without insurance separately or the national average for premiums for plans with a certain level of coverage.
But now, we need to get into hard numbers.
‘‘(A) IN GENERAL.—Except as provided in subparagraphs (B) and (C), the applicable dollar amount is $695. ‘‘(B) PHASE IN.—The applicable dollar amount is $95 for 2014 and $325 for 2015.
So, in the law itself, it flat out tells you that the tax will increase each year starting in 2014.
The other option for funding this tax is that it will be a percentage of an individual’s income. From the law:
‘‘(B) PERCENTAGE OF INCOME.—[As revised by section 1002(a)(1) of HCERA] An amount equal to the following percentage of the excess of the taxpayer’s household income for the taxable year over the amount of gross income specified in section 6012(a)(1) with respect to the taxpayer for the taxable year:
‘‘(i) 1.0 percent for taxable years beginning in 2014.
‘‘(ii) 2.0 percent for taxable years beginning in 2015.
‘‘(iii) 2.5 percent for taxable years beginning after 2015.
So, again, the law itself states that the tax will increase each year until 2016. Do realize this only applies to the individual mandate/tax part of the bill.
In terms of what is required to be paid in this mandate/tax, it is whichever amount is higher – the flat dollar amount or the percentage of income.
Let’s look at these numbers and see how it stacks up to the Democrats’ cost of $94 billion a year for 10 years – since it is the lowest of the three. Note: We will round off numbers for ease of calculation.
According to the U.S. Census, there are over 300 million Americans living in this country that would require health insurance to be in compliance with this mandate. However, according to the BLS, that bill is picked up by the approximately 143 million working Americans. See chart below:
According to the BLS, there are approximately 12.2 million people who are considered unemployed. There are approximately 87.9 million who are not in the workforce with only 6.8 million of them actually wanting a job. For sake of argument, we will eliminate the 6.8 million who actually want a job, because they would probably gladly pay for insurance if they had a job.
So, that would leave us with 81.1 million people not in the workforce, but who are capable of working.
Now, let’s get back to the Democrats’ claims about Obamacare and the individual mandate/tax for not having health insurance. The numbers about how many people who would actually have to pay this tax would tend to vary, but here are a few examples that show agreement on what that number would be:
• From the Urban Institute (with independent analysis by MIT economist Jonathan Gruber) – According to their study, approximately 7.3 million people (2 percent) would have to pay this tax.
• According to Politico.com, about 7 million people would have to pay the fine. (Note: They are quoting the Urban Institute study listed above.)
• ThinkProgress.org has that number between 2 and 5 percent. They also quoted the Urban Institute study.
So, we will use the Urban Institute number and then round it up to 8 million for ease of calculation.
So, in 2014, when the applicable dollar amount is $95, the individual mandate/tax would generate a grand total of $760,000,000 or $760 million dollars. That leaves approximately $93.2 billion dollars to be raised for the year 2014 – since that is the first year the tax would be collected according to the law itself – to pay for Obamacare.
Where is that money coming from?
Even if we went with the $695 amount – which will be rounded up $700 for ease of calculation, the mandate would only generate $5,600,000,000 or $5.6 billion dollars. That would leave $88.4 billion dollars to be raised for the year 2014 to pay for Obamacare.
Again, where is that money coming from?
According to the BLS, the average mean wage was $45,230 for over 800 different occupations. So, if we used the percentage of income calculation, the tax of 1% on income would be $452.30.
So, if you multiplied that by 8 million, the individual mandate/tax would generate $3,618,400,000 dollars or $3.7 billion dollars from the mandate/tax alone. That would leave approximately $90.3 billion dollars left to be raised for the year 2014 to pay for Obamacare.
Where is this money going to come from? Do realize that this is assuming that all of these 8 million people would actually pay the tax.
The numbers don’t lie – politicians do.