If you drive a car, I’ll tax the street
If you try to sit, I’ll tax your seat
If you get too cold, I’ll tax the heat
If you take a walk, I’ll tax your feet
‘Cause I’m the taxman, yeah, I’m the taxman
— The Beatles
Tax season is upon us. Holidays often add stress to our lives, among them this time of the year when we celebrate our great country by doing our patriotic duty. Sousa’s ‘Stars and Stripes Forever’ plays in our heads as we fire up TurboTax, and the so-called Affordable Care Act continues to add to the financial burdens of millions of American families.
The IRS released data regarding last year’s tax filings related to Obamacare, revealing that approximately 6.5 million Americans paid a penalty because they didn’t have health insurance, amounting to $3 billion in revenue.
That comes to double the revenue in 2014 when the penalties first kicked in. Initially, however, the penalties were much smaller — a flat fee of $95 or 1 percent of gross income — but they increased to a flat fee of $695 or 2.5 percent of gross income.
The stiffer penalties appear to have had an impact. In 2014, 7.5 million Americans paid the penalty, 1 million more than in 2016. The penalty had the desired effect, in a perverse way, of incentivizing people to purchase health care. An average payment of $470 proved too inhibitive for many even in comparison to the costs of rising premiums.
So again, Obamacare has reduced the number of uninsured, the predictable outcome of mandating insurance coverage by law, while cruelly penalizing people financially who could not afford health insurance before, are rarely more able to afford now, and often find it more costly.
Like many readers presumably, I have faced this choice. As a young, healthy American, my health care costs are lower than most, making the increasingly restricted and expensive insurance options unattractive. Though I was fortunate enough to have employer-provided coverage last year, meaning that I didn’t contribute to the $3 billion in revenue, many Americans are not so lucky.
One of about four praiseworthy things that President Trump has done so far is to sign an executive order on his first day in office that requires federal agencies to reduce the burden of Obamacare. One way in which the IRS will comply with the order is that it will no longer require taxpayers to mark whether they have health insurance on their returns.
Yet this is but a small relief, as Bloomberg BNA notes:While the step may be seem to be a weakening of the ACA’s mandate, the IRS makes clear that the law is still in force and “taxpayers remain required to follow the law and pay what they may owe.” IRS Commissioner John Koskinen has previously said despite the flurry of activity on the Hill regarding the ACA, taxpayers should follow current law until there is a new one.
To what extent the order changes the revenue and coverage outcomes of the law will not be known for another year, but doubtless it will not in itself change the trajectory of the Affordable Care Act in continuing to force families to make decisions about which rising costs they will incur.