With the Supreme Court upholding the individual mandate at the center of President Barack Obama's health care overhaul by calling it a tax, attention has turned to the law's price tag as opponents seek to highlight the costs of the Affordable Care Act.
"This is the largest tax increase on the poor and middle class in the history of this country," Rep. Jeff Landry, R-La., said Thursday from in front of the Supreme Court. He called for voters to repeal the tax at the ballot box in November.
The ruling puts the power back in the hands of the people, Rep. Jim DeMint, R-S.C., echoed during a news conference Thursday, and will allow Americans to decide between repealing and replacing the law through a Republican Congress and a Republican president, or keeping the law.
Either way, he said, the law was sold to Americans as a lie, with the Obama administration arguing to the people that it wasn't a tax before the bill passed, and arguing before the Supreme Court that it was a tax afterward.
"If Obamacare had been presented in the first place as a tax, I don't think it would have ever passed," DeMint said. "If Americans can see a tax, they're more likely to resist it."
Chief Justice John Roberts wrote the majority opinion in the case, stating that the Affordable Care Act's requirement that certain individuals pay a financial penalty for not obtaining health insurance could be characterized as a tax. Justices Sonia Sotomayor, Ruth Bader Ginsburg, Elena Kagan and Stephen Breyer voted to uphold the mandate under both the commerce clause and as a tax, while Justices Anthony Kennedy, Samuel Alito, Antonin Scalia and Clarence Thomas rejected the mandate entirely.
Utah Gov. Gary Herbert said Thursday that Obama argued the health care law was not going to require a tax increase, "Yet we find out today it is constitutional because it is a tax increase on everybody, including the middle class. The irony is kind of rich."
A Daily Caller article said that 75 percent of the mandate tax will fall on Americans earning less than $120,000 a year, with 21 percent falling on people who earn just above the poverty level, 25 percent on people who earn between two and three times the poverty level, 18 percent on people who earn between three and four times the poverty level, 11 percent on people who earn between four and five times the poverty level and 25 percent on people who earn more than five times the poverty level.
However, the mandate is not the only tax contained within the law.
Americans for Tax Reform listed some $500 billion-plus in tax hikes over the next ten years contained within the law, including the mandate. The hikes range from taxes that took effect in 2010, like the excise tax on charitable hospitals and the tax on indoor tanning services, to taxes that take effect in 2018, like the excise tax on comprehensive health insurance plans. The 2012-2013 list includes:
Employer reporting of insurance on W-2 (January 2012)
Surtax on investment income ($123 billion/Jan. 2013)
Hike in Medicare payroll tax ($86.8 billion/Jan. 2013)
Tax on medical device manufacturers ($20 billion/Jan. 2013)
Raise "haircut" for medical itemized deduction from 7.5 percent to 10 percent of AGI ($15.2 billion/Jan. 2013)
Flexible spending account cap ($13 billion/Jan. 2013)
Elimination of tax deduction for employer-provided retirement prescription drug coverage in coordination with Medicare Part D ($4.5 billion/Jan. 2013)
$500,000 annual executive compensation limit for health insurance executives ($0.6 billion/Jan. 2013)
The House Committee on Ways and Means also released a numbers analysis showing a $1,200 increase in health care premiums for an average family in the year following the enactment of the health care law, and a 13 percent premium increase in 2016 for individuals who buy coverage on their own. The analysis puts the number of tax increases in the bill at 21, with 12 of them slated to affect Americans earning less than $200,000 a year for singles and $250,000 for married couples.
A Bloomberg analysis puts the new taxes at $813 billion, with the largest tax on individuals scheduled to take effect at the beginning of 2013. A 3.8 percent tax on "unearned income" as well as an additional 0.9 percent levy on wages exceeding the income thresholds of $250,000 per year for married couples and $200,000 for individuals would result in an estimated 4.1 million households paying one or both new taxes.
For individuals, the law places caps on the amount of pre-tax money that can be diverted to flexible-spending arrangements offered by some employers to help with health care costs, requires people to obtain prescriptions to use pre-tax dollars in FSAs and health savings accounts for over-the-counter medication and makes it harder to take itemized deductions for medical expenses.
Avik Roy, writing at Forbes, suggested that the cost of the bill may encourage colleges to drop student health plans because it will increase the cost of those college plans by as much as 1,112 percent. As an example, Roy cited Lenoir-Rhyne University in Hickory, N.C., which paid $245 per student per year for 2011-2012, but will have to pay $2,507 per student next year in order to meet the law's requirements.
For Republicans on Capitol Hill, the mandate is a tax worth fighting, and could be the first step to full repeal. Because the mandate is now considered a tax in the eyes of the Supreme Court, the Senate can use the reconciliation process to nix the mandate, meaning the support of only 51 Senators would be needed.
Republicans could lower the tax for not having health insurance down to $0.00 as a matter of budget reconciliation and "voila — no more mandate," Timothy P. Carney wrote at The Washington Examiner.
Lachlan Markay, a reporter with The Heritage Foundation, tweeted that a Senate GOP aide confirmed that reconciliation will be used to repeal the health care law. Reconciliation was used to pass the law in 2010.
Sen. Lindsey Graham, R-S.C. encouraged Democrats to stand by the mandate/tax, or to stand with Republicans in repealing and replacing Obama's health care overhaul.
"The problem for the American people is this is a massive tax increase at a time they can least afford it," Graham said in a statement. "The question for Congress is — did you intend to tax the American people by hundreds of billions of dollars to create a government-controlled health care system or not?"
In his remarks after the Supreme Court ruling, President Obama did not mention the mandate, the possibility of reconciliation or the word "tax," but he did praise the court decision, saying it was a victory for people all over the country.
The ruling, Obama said, upheld the principle that people who can afford heath insurance should take the responsibility to buy it. If they do so, others won't be stuck paying for their emergency room care in the form of higher premiums. Additionally, he said, if insurance companies must cover people with preexisting conditions but don't require people who can afford it to buy their own insurance, it would drive up everyone's premiums.
The Barackobama.com website features an interactive format that seeks to inform people on how the health care law can benefit individuals with private insurance, Medicare, Medicaid or no insurance. Due to the health care law, the website states, 12.8 million Americans will receive insurance rebates averaging $151 per household, and 3.1 million young Americans will gain coverage.
Whitehouse.gov reports that 54 million Americans will have coverage for preventative services free of cost, 32.5 million people with Medicare have used a free preventative service, 3.6 million seniors have saved $2.1 billion on prescription drugs, 2.5 million more young adults have health insurance through their parent's plan and 50,000 uninsured people with pre-existing conditions have gained coverage.
The future impact of the law remains largely unknown. Will it expand coverage to all Americans as the president suggests, or will it hit millions of Americans with higher taxes? The duty of the court, Chief Justice John Roberts said in his opinion, was not to make a policy judgment on the law's possible benefits or hazards.
"Those decisions are entrusted to our nation's elected leaders, who can be thrown out of office if the people disagree with them," he wrote. "It is not our job to protect the people from the consequences of their political choices."
Whatever the effects of the law, it brings good and bad news for the president, Ron Fournier wrote at National Journal.
"The good news is that Chief Justice John Roberts just saved your legacy and, perhaps, your presidency by writing for the Supreme Court majority to rule health care reform constitutional," Fournier said. "Bad news is he declared you a tax-raiser."
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