Why the Uninsured Prefer to Pay the ObamaCare Tax Penalty

Recently, three Democrats began lobbying to delay the ObamaCare tax penalty for not buying healthcare insurance because they are worried that millions of their constituents are going to be blind-sided by the cost.  Even though those same three Democrats voted for ObamaCare and should be well aware that there was an individual mandate in the law; and, that not buying insurance, carried a penalty.  A penalty that was designed to force the uninsured to buy insurance.  This was a law that the Democrats, alone, legislated and got signed.  Even so, the uninsured rate is still extremely high with 42 million Americans still without insurance; and, any dent in that number will be small because Health and Human Services only expects to enroll and re-enroll a total of 10 million this year. 

What those Democrats don't seem to understand is that people are electing to pay the penalty because they can't afford the insurance that they are being forced to buy under the Affordable Care Act (aka ObamaCare).   Also, many (if not most) know the penalty won't be applied to them if they file for a hardship exemption.

To understand this and why ObamaCare insurance is so unaffordable and a hardship for millions, you need to use the Tax Policy Center's ObamaCare penalty calculator. 

Using the median household income in the country of about $52,000 a year and assuming a typical family of two adults and one child, the 2014 tax penalty would be $419 for not buying insurance. More importantly, a family of that size and income would not be eligible for any subsidy to help pay for their insurance. But, here's the kicker and why the Democrats just don't understand why so many would prefer to pay the penalty.  The lowest cost to buy insurance in the ObamaCare exchange for that family size was $9,792 last year.  In tax year 2015, the penalty is upped to $975; and, so is the cost of insurance at $10,280.  Next year, the tax penalty will be yet higher at $2,080.  Even so, the cost of paying the penalty greatly outweighs the cost of buying the insurance. 

You don't have to be an MBA to understand that buying insurance at that income level is a big financial hit after paying federal income taxes.  In fact, a family making $52,000 a year will only have $39,000 left after paying their federal taxes. Much lower if state income taxes also need to be applied. So, having to spend nearly $10,000 to buy ObamaCare insurance will, at the very least, cut the average family's disposable income by more than one-quarter; leaving them with less than $29,000 to live on.  On top of that, that same family would still face a potential out-of-pocket expense per individual of $6,600 a year; or, $13,200 per family.  A fact that most Democrats don't seem to understand.  So, for a lot of people, the only choice is to pay the penalty and forgo the insurance. Most of them also probably know that they can go to any Medicare-accepting Hospital and they will be treated for free under a law called the "Emergency Medical Treatment and Active Labor Act".

Literally, those aforementioned Democrats don't seem to understand that it is the law that should be delayed and, not just the penalty.  If not, the number of uninsured in this country is not going to be eliminated; and, all too many hospitals will be left holding the bag for their care.

References:

 APNewsbreak: Democrats seek relief from health law penalties: http://hosted2.ap.org/APDEFAULT/3d281c11a96b4ad082fe88aa0db04305/Article_2015-02-16-US--Health%20Overhaul-Penalties/id-b1c64dfc3f7946adba5dcd09c2ec5ff4

Democrats Keep Running Away From ObamaCare: http://news.investors.com/ibd-editorials-obama-care/021715-739656-democrats-want-still-more-waivers-to-obamacare-mandate.htm

Millions to owe Obamacare tax penalty: http://money.cnn.com/2015/01/28/news/economy/obamacare-tax-penalty/

US Census Data: Uninsured Rate…Increased in 2014?: http://townhall.com/tipsheet/guybenson/2014/09/22/us-census-bureau-number-of-uninsured-americansincreased-in-2014-n1894992

Median Family Income: https://www.google.com/search?q=median+family+income&ie=utf-8&oe=utf-8

ObamaCare Penalty Calculator: http://taxpolicycenter.org/taxfacts/acacalculator.cfm

$ 52,000.00 Tax Calculation for 2015 Tax Year: http://www.taxformcalculator.com/tax/52000.html

Bronze Plan Deductibles and Out-of-pocket Caps: http://www.healthpocket.com/individual-health-insurance/bronze-health-plans#.VOTK1y6S-Ng

Emergency Medical Treatment and Active Labor Act: http://en.wikipedia.org/wiki/Emergency_Medical_Treatment_and_Active_Labor_Act

Latest ObamaCare Delay Confirms That The Healthcare Law Is A Job Killer

Ever since ObamaCare was passed into law, non-partisan economists have labelled it a job killer.  In doing so, they point to the fact that employers can avoid any mandates and penalties by converting full time workers to part-time and by keeping the full-time staff under 49; a simple task if you are able to convert those employees to outside, contract  labor.  Other economists believe that struggling companies, unable to either provide insurance or pay the penalties, will have no other choice but to shutter their businesses.  Others point to higher costs and new taxes associated with the law as potential drags on the economy with job losses to follow.

Those on the left have countered this by pointing back to the original Congressional Budget Office's analysis of ObamaCare which said that an insignificant amount of jobs (800,000) would be impacted: that being only one-half of one percent of the total workforce.  Further, the proponents of the law have noted that the benefits to the overall economy would be greater than any small number of jobs being lost. Some even argued that it would actually create jobs.

Well, a funny thing happened on the way to rolling out ObamaCare last week.  This time, in the 29th such delay, Obama told employers with 50-to-99 employees that their compliance with the law was delayed until January 1, 2016.  Or, that's what most of the news media reported.  What was little reported is that an employer has until that date to comply "as long as" that employer signs an affirmation, as part of each and every tax submission, that says that any changes they might have made in staffing were not a result of trying to avoid the mandates of ObamaCare.  Otherwise, if they lied, they would be subject to both penalties and imprisonment for perjury under Federal law.  Now, if that doesn't backhandedly scream proof of  job-killing, I don't know what does!

Obviously, the delay and the associated "perjury" condition is intended to stop any further deterioration of the workforce in advance of the November elections. I'm quite sure that the President's economic advisers have told him things like, in the last year, 75% of the jobs being created were part-time.  Or, that productivity has risen and unit labor costs have fallen to levels that haven't been seen since the last two recessions.  Or, that the decline in retail sales is closely following the pattern that preceded the last great recession in late 2007.

Any way you shake it, the Presidents signature legislation is harming both the economy and jobs; and, this latest delay and that "affirmation" just proves it.

References:

Businesses must certify under penalty of perjury that job cuts aren’t Obamacare dodge: http://www.washingtontimes.com/news/2014/feb/11/businesses-must-certify-under-penalty-perjury-job-/

CBO: Healthcare to Shrink Workforce by 800,000: http://www.politico.com/news/stories/0211/49273.html

Chart: Productivity and Unit Labor Costs: http://www.briefing.com/Common/Images/Content/PageContent/EcData/prodann.gif

Chart: Retail Sales: http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/02/Retail%20Sales%20Control%20Group_0_0.jpg

 75% Of Jobs Created This Year Were Part-Time: http://jobs.aol.com/videos/business-economy/75-of-jobs-created-this-year-were-part-time/517905414/

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Sebelius: Delaying ObamaCare is Not an Option

In a PBS interview last November, Health and Human Services Secretary, Kathleen Sebelius, said this:

"Delaying the Affordable Care Act wouldn’t delay people’s cancer or diabetes or Parkinson. It doesn’t delay the higher cost all of us pay when uninsured Americans are left with no choice but to rely on emergency rooms for care. So, for millions of Americans, delay is not an option."

Yet, just last weekend, another delay -- the 27th so far in less than a year -- was put in place.  This time it again postpones the employer mandate for businesses with 50 to 100 employees until January 2016.  Thui, conveniently avoids the onslaught of expected insurance cancellations that would have occurred during the run up to the 2014 elections as many employers might choose to pay the penalty versus providing insurance by the current January 1, 2015 deadline.

Apparently, cancer, diabetes, and Parkinson's will now have to wait after all until the Democrats are able to skate through the 2014 elections without all the problems of ObamaCare hanging around their necks.  Obviously,  the President's delay of all the insurance-killing and job-killing aspects of his health care reform completely contradicts the expressed belief by the Democratic National Committee Chairman, Debbie Wasserman Schultz, that they will run on ObamaCare in 2014 and win.

One has to wonder.  If it is so great for America, why should so much of it have to be delayed?  After all, Sebellius told us that it wasn't an option.

References:

Kathleen Sebelius to Congress: Delay of health care law ‘not an option’: http://www.pbs.org/newshour/bb/government_programs-july-dec13-healthcare_11-06/

Employer Mandate Delayed Again: http://www.politico.com/story/2014/02/obamacare-employer-mandate-delay-103338.html

Wasserman Schultz: Democrats Will Win in 2014 Running on Obamacare: http://cnsnews.com/news/article/terence-p-jeffrey/wasserman-schultz-democrats-will-win-2014-running-obamacare

Democratic candidates will be able to run on ObamaCare as an advantage leading into the 2014 election, - See more at: http://cnsnews.com/news/article/terence-p-jeffrey/wasserman-schultz-democrats-will-win-2014-running-obamacare#sthash.6fH0XAgq.dpuf

Democratic candidates will be able to run on ObamaCare as an advantage leading into the 2014 election, - See more at: http://cnsnews.com/news/article/terence-p-jeffrey/wasserman-schultz-democrats-will-win-2014-running-obamacare#sthash.6fH0XAgq.dpuf

Democratic candidates will be able to run on ObamaCare as an advantage leading into the 2014 election, - See more at: http://cnsnews.com/news/article/terence-p-jeffrey/wasserman-schultz-democrats-will-win-2014-running-obamacare#sthash.6fH0XAgq.dpuf