Obamacare Ruling: Hardly a Dystopian Future

by Mark Wilson

Conservatives are predictably foaming at the mouth over the Supreme Court’s decision today in Nat’l Federation of Indep. Businesses v. Sebelius, the Obamacare case.

“We, the American people, have just been deceived in ways that nobody contemplated. And what we now have is the biggest tax increase in the history of the world,” Rush said. Marco Rubio called it a “middle class tax increase.”

Of course, such a statement is demonstrably false. How many people will the individual mandate portion of the Affordable Care Act affect? Realistically, 7.3 million people. Here’s the breakdown:

  •  8.1 million will be eligible for free/close-to-free insurance through expansion of Medicaid under the law
  • 10.9 million will have to purchase coverage but receive subsidies to help with premiums
  • 7.3 million (2 percent of population) will not be eligible for any assistance and will simply have to buy a plan or pay the penalty

So, assuming the eligible population takes full advantage of Medicaid expansion and premium assistance, 2% of the population will either have to purchase insurance or pay the “tax.” The tax itself amounts to far less than annual insurance premiums: $695 or 2.5% of household income, whichever is greater, but capped at the price of the cheapest insurance plan. Elderly people are already covered by Medicare; poor people are already covered by Medicaid; most employees are covered by employer-provided health insurance plans. After 2016, people for whom the cheapest insurance plan would cost more than 8% of the income would be exempt from the mandate.

The figure touted by conservatives to show that many people outright refuse health insurance coverage when it is offered to them is between 30% and 50% of the uninsured. But as I wrote in 2009, the overwhelming majority of people who decline employer health insurance (63%) do so because they’re already covered in some other way; e.g., by a spouse’s health insurance plan. About 7.5% of people refuse insurance outright for other reasons, including because they think they don’t need it. That severely cuts into the notion that burly-chested James Fenimore Cooper types are refusing health insurance in droves.

So, who makes up this 2% who aren’t eligible for assistance and will either have to buy insurance or pay the penalty? No one really knows, but everyone presumes that this 2% is composed of young, healthy people who feel like they don’t need insurance. The penalty is so low that they may just pay it instead of purchasing insurance.

The current conservative talking point — readily ascertainable as a collective talking point through the quantity of similar results obtained through a Google search — is that the ACA violates Obama’s 2008 pledge not to raise taxes on the poor and middle class. That remains to be seen; most poor and middle-class households would either qualify for an exemption or already have some type of insurance, whether through an employer or through a government program like Medicaid.

The mouth-foaming was predictable, for sure. Also predictable: that it was a whole lot of sound and fury, signifying nothing.