Last Updated:April 17 @ 10:04 pm

Obamacare tax penalty to hit 6 million, mostly middle class

By Ricardo Alonso-Zaldivar

WASHINGTON (AP) - Nearly 6 million Americans — significantly more than first estimated— will face a tax penalty under President Barack Obama's health overhaul for not getting insurance, congressional analysts said Wednesday. Most would be in the middle class.

The new estimate amounts to an inconvenient fact for the administration, a reminder of what critics see as broken promises.

The numbers from the nonpartisan Congressional Budget Office are 50 percent higher than a previous projection by the same office in 2010, shortly after the law passed. The earlier estimate found 4 million people would be affected in 2016, when the penalty is fully in effect.

That's still only a sliver of the population, given that more than 150 million people currently are covered by employer plans. Nonetheless, in his first campaign for the White House, Obama pledged not to raise taxes on individuals making less than $200,000 a year and couples making less than $250,000.

And the budget office analysis found that nearly 80 percent of those who'll face the penalty would be making up to or less than five times the federal poverty level. Currently that would work out to $55,850 or less for an individual and $115,250 or less for a family of four.

Average penalty: about $1,200 in 2016.

"The bad news and broken promises from Obamacare just keep piling up," said Rep. Dave Camp, R-Mich., chairman of the House Ways and Means Committee, who wants to repeal the law.

Starting in 2014, virtually every legal resident of the U.S. will be required to carry health insurance or face a tax penalty, with exemptions for financial hardship, religious objections and certain other circumstances. Most people will not have to worry about the requirement since they already have coverage through employers, government programs like Medicare or by buying their own policies.

A spokeswoman for the Obama administration said 98 percent of Americans will not be affected by the tax penalty — and suggested that those who will be should face up to their civic responsibilities.

"This (analysis) doesn't change the basic fact that the individual responsibility policy will only affect people who can afford health care but choose not to buy it," said Erin Shields Britt of the Health and Human Services Department. "We're no longer going to subsidize the care of those who can afford to buy insurance but make a choice not to buy it."

The budget office said most of the increase in its estimate is due to changes in underlying projections about the economy, incorporating the effects of new federal legislation, as well as higher unemployment and lower wages.

The Supreme Court upheld Obama's law as constitutional in a 5-4 decision this summer, finding that the insurance mandate and the tax penalty enforcing it fall within the power of Congress to impose taxes. The penalty will be collected by the IRS, just like taxes.

The budget office said the penalty will raise $6.9 billion in 2016.

The new law will also provide government aid to help middle-class and low-income households afford coverage, the financial carrot that balances out the penalty.

Nonetheless, some people might still decide to remain uninsured because they object to government mandates or because they feel they would come out ahead financially even if they have to pay the penalty. Health insurance is expensive, with employer-provided family coverage averaging nearly $15,800 a year for a family and $4,300 for a single plan. Indeed, insurance industry experts say the federal penalty may be too low.

The Supreme Court also allowed individual states to opt out of a major Medicaid expansion under the law. The Obama administration says it will exempt low-income people in states that opt out from having to comply with the insurance requirement.

Many Republicans still regard the insurance mandate as unconstitutional and rue the day the Supreme Court upheld it.

However, the idea for an individual insurance requirement comes from Republican health care plans in the 1990s.

It's also a central element of the 2006 Massachusetts health care law signed by then-GOP Gov. Mitt Romney, now running against Obama and promising to repeal the federal law.

Romney spokeswoman Andrea Saul said Wednesday the new report is more evidence that Obama's law is a "costly disaster."

"Even more of the middle-class families who President Obama promised would see no tax increase will in fact see a massive tax increase thanks to Obamacare," she said.

Romney says insurance mandates should be up to each state. The approach seems to have worked well in Massachusetts, with virtually all residents covered and dwindling numbers opting to pay the penalty instead.

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5 Comments

  1. inluminatuoComment by inluminatuo
    September 20, 2012 @ 10:12 am

    Fool me once shame on you, fool me a hundred times shame on me,,,,,,,for anyone who ever voted for these deceivers in the first place. Will you enjoy that $1200 middle class tax for not buying insurance? Special exceptions made of course for those created unequal in brains who continue to vote for the special privileges and exeptions he offers you, make that buys your vote with. Pay little now, pay alot more later. The piper will always be paid,,,,,as usual by the children in crushing debt slavery.

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  2. nickster99Comment by nickster99
    September 20, 2012 @ 10:43 am

    The 6 million will turn into 60 million once all the large employers of this country cancel all their health insurance policies and everyone will be required to pay $15,000.00 plus each year to buy their own. Yeah right this will DESTROY THE ECONOMY FOR SURE!

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  3. sexysadieComment by sexysadie
    September 20, 2012 @ 11:14 am

    “A spokeswoman for the Obama administration said 98 percent of Americans will not be affected by the tax penalty — and suggested that those who will be should face up to their civic responsibilities.”

    CIVIC RESPONSIBILITIES????? This is nothing less than BO’s attempt at REDISTRIBUTION! This is an outrage and the GOP should be shouting this from the rooftops!

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  4. brightlightComment by brightlight
    September 20, 2012 @ 2:25 pm

    And the IRS says it will not chase those who would try to avoid the penalty they’ll just deduct it off their refunds.Anyone wondering why they are hiring thosands of lawyers at the IRS? Sure, go vote for the man.Be all in for him and then when they come for you because you did’nt speak up when you should have don’t look to those who told you so for help.He’s for the poor?Check out the recent reports of him being involved in shady realestate law with chicago slum lord Valery Jarret that resulted in the evictions of hundreds of poor tenents from buildings they both made millions processing.Thats our man,you know , the one behind the curtain.

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  5. teapartyproudComment by teapartyproud
    September 21, 2012 @ 5:53 am

    Here’s the fun part. Those early penalties are just a token amount.

    It will still be cheaper than actually buying health insurance and insurance companies can’t deny you coverage for pre-existing conditions. The result is that the government gets paid for providing zilch, while the insurance companies are forced to pay claims after people get seriously sick and purchase health insurance, which cannot be denied to them. The government is actually stealing premiums from the insurance companies, while at the same time, forcing them to take on and pay claims only to people who are already sick.

    How long do you think insurance companies can stay in business like that? Once the insurance companies are driven out of business, which won’t take long, the tax penalty will rise dramatically, forcing all to buy their health insurance from the government.

    Voila! We have single payer, national health care and Obama the Destroyer wins again.

    Anyone who thinks they will benefit from this abomination of a plan, had better seriously think again.

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  6. Pingback: Repeal Obamacare |

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