Chances are you’ve heard this claim hundreds of times already and you'll hear it repeatedly on Wednesday when the House casts it's 31st vote to repeal the Affordable Care Act. But as Franklin Roosevelt said “Repetition does not transform a lie into truth”. So, here’s the truth about this latest anti-health care reform talking point:
The Affordable Care Act (ACA) includes a penalty for Americans who do not buy insurance. The Supreme Court ruled that penalty constitutional under Congress’ right to tax. However, when compared to the 15 significant tax increases since 1950, the Affordable Care Act, which amounts to an increase of 0.49 percent of GDP, comes in 10th. That’s even less than President Reagan’s tax increases in 1982. This chart is from the Incidental Economist.
Also, whether you call it a tax or a penalty; it's important to know that hardly anyone will actually pay it. In Massachusetts, the only state with an insurance mandate (implemented by former Governor and GOP Presidential candidate Mitt Romney) less than 1 percent of the state’s residents paid the penalty in 2009. Not only will few people face this penalty, it’s also very small. According to Chief Justice John Roberts: “[F]or most Americans the amount due will be far less than the price of insurance, and, by statute, it can never be more.”
So, for perspective let's compare this to the “hidden health tax” which will be eliminated thanks to the ACA’s insurance mandate. A study by Families USA found that the uninsured paid only 37 percent of the cost of their healthcare with government programs and charities footing 26 percent. The remaining 37 percent became a “hidden health tax” in the form of higher insurance premiums for all American businesses and families. That added up to $1,017 per family in 2008. A study by the Kaiser Family Foundation found similar results.
When the Affordable Care Act becomes fully implemented in 2014 the mandate that everyone carry some form of health insurance means the “hidden health tax” paid by millions of insured Americans will disappear. Thanks to health care reform, millions Americans will no longer face huge hidden health care costs each year even though an estimated 1-3% of Americans who refuse to buy insurance might face a small penalty.
Whatever you call it – a penalty or a tax – that’s just common sense reform.