Maggie's Farm

Re: Helpful flowchart

In 2010, there were 43 million "tax units" (in IRS jargon) with taxable income less than $9,350, the threshold below which an individual is not required to file a tax return and thus would not be subject to the Obamacare penalty for being without health insurance. This figure constitutes 1/4th of all "tax units" who had any federal taxable income for the year. In the next highest quintile of taxable income, there were an additional 18 million or so "tax units" with taxable income above $9,350 but below $18,700, the threshold of FAMILY income below which no return is required and no health care penalty will be imposed.

In total, then, 60 million or more individuals or family members, counting one in 5 Americans + those who are living in the US illegally, will not be subject to a penalty by the IRS if they do not have health insurance. This huge group likely accounts for a large fraction of the non-student gap group in the population that currently lacks health insurance, for the likely reason they can't afford it. Under the Obamacare law, the same group will receive the largest federal subsidies to help them buy health insurance, so many fewer of them will have any reason to forgo health insurance; for them, it will be free.

The penalty will in large measure apply to income earners above those limits and will therefore fall most heavily on the middle class income earners who fill the higher income brackets and vastly outnumber the wealthy 1% who fall in the very top of the top quintile. On the other hand, the penalty is much smaller than the actual cost of a family health insurance policy these days. Those who do not have an employer-provided health plan and are healthy enough that they feel no need to purchase health insurance will save a lot of money if they pay the penalty instead of buying health insurance. If they opt-out but do not pay the penalty, the law, at least in the draft form I saw before the final bill was passed, provides no enforcement mechanism for the IRS to correct the delinquency. IIRC, the IRS was specifically barred from applying the strong civil and criminal remedies it has available in the case of federal income taxes.

Pethokoukis writes: "Rising healthcare costs have been driven by public policies which have insulated consumers from recognizing and bearing the true costs of their healthcare decisions."

C'mon, is this really the biggest driver of rising health care costs, or is it other factors, for example, the availability of expensive new medical technologies that most think should be available to anyone who gets sick, regardless of that person's income? Or perhaps it is the "don't spare the expense" attitude normal people have---understandably I will add---when it comes to making proxy healthcare decisions for a loved one at the end of that person's life. On average 1/3 of our lifetime cost on health care comes in the last 3 years of our lives. Why doesn't Pethokoukis address that difficult issue? Instead, he offers free market ideas on reforming health care that apply mostly to middle-age, middle-class working people who complain about the high cost of health care but really can afford it, despite the expense. He says nothing about the one issue that was central to Obamacare of making good care available on an equal basis to those who truly cannot afford it because their income is so low it is constantly being outstripped by the rising cost of the modern miracles of medicine.