Obamacare and the ob/gyn: More questions than answers

Among the surprises was that Chief Justice John G. Roberts Jr, a strict constitutionalist, joined the court's 4 liberal justices to form a 5-to-4 majority upholding most of the major provisions of the ACA. Justice Roberts and his colleagues argued that the Act's most controversial provision-the individual mandate requiring most adults obtain insurance or pay a penalty when they file their tax returns-was constitutional. Interestingly, he ruled it constitutional based not upon Congress's right to regulate interstate commerce (as proponents had argued) but on its power to levy taxes.

The second surprise was the concurrence by 7 of the justices that Congress had no constitutional authority to coerce individual states into participating in the Act's second most controversial provision. That is, the requirement to expand Medicaid coverage to families whose household income falls below 133% of the federal poverty line (about $31,000 for a family of four). Rules and requirements for qualifying for adult Medicaid coverage currently vary from state to state.

What will be the real impact of the individual mandate?

In essence, the individual mandate requires that most legal residents of the United States obtain a minimal level of health insurance coverage. Those who fail to do so will owe a modest amount of additional income tax. (That is why Justice Roberts was correct in calling the mandate a tax.) However, a bevy of groups are excluded, such as prisoners, Native Americans, Christian Scientists, undocumented aliens, and those with so with little income they don't need to file tax returns. Also excluded are those who are required to contribute more than 8% of their household income for premiums for employer-provided health insurance. To help low-income families, the Medicaid income threshold will be raised to 133% of the federal poverty line and tax credits to purchase insurance in health exchanges will be made available to families with incomes between 133% and 400% of the poverty level.

The problem, however, is that the actual penalty/tax is lower than typical health insurance premiums. For example, the fixed-dollar penalty per individual family member is $95 in 2014, $325 in 2015, $695 in 2016, and indexed to inflation thereafter. Moreover, even that rather modest amount is reduced by 50% for anyone younger than age 18, and the per-family cap is 300% of the individual level. Thus, the ACA is hardly "the largest tax increase" in history, as claimed by certain politicians.¹ Penalties can also be assessed as a percentage of family income, but the value is about the same for lower-income families. So, if you are a young, healthy adult, you may just accept the minimal tax, at least for the first 2 years. The exact impact of the mandate, then, clearly is hard to predict.