GOP Tax Plan Would Kill ObamaCare Individual Mandate, And That’s Good News | Stock News & Stock Market Analysis

Health Care: Will Republicans even be able to repeal the most egregious failure in ObamaCare? We’re about to find out as the tax cut bill, which in the Senate will include repeal of ObamaCare’s individual mandate tax, moves forward.

According to the Congressional Budget Office, eliminating the individual mandate will save more than $300 billion over the next decade, which is money Republicans can use to “pay for” other tax cuts. Critics argue this is just another attempt by the GOP to “gut” ObamaCare, which might be true if the mandate worked at all.

XAutoplay: On | OffThe much-hated individual mandate was supposed to be the glue that held ObamaCare together. Without it, we were told, young and healthy people would put off buying insurance until they got sick. The mandate would “encourage” these people buy insurance, rather than pay a tax penalty, thereby keeping the ObamaCare insurance markets stable and premiums low.

That was the theory, anyway. But the mandate never came close to working that way in practice.

Democrats who wrote the law decided to make the amount of the tax penalty relatively small, and then neutered the IRS’s ability to collect it from those who didn’t pay up, to avoid political blowback.

They also made it easy to avoid the penalty altogether by creating a long list of exemptions: You could go uninsured and not pay the penalty tax if you, for example, received a shut-off notice from a utility, had a death in the family, suffered from domestic violence, enrolled in a health care sharing ministry, and so on.

Not surprisingly, nearly 13 million tax filers claimed one of these exemptions on their 2015 returns. That’s twice the number that paid the penalty. The average penalty, according to the IRS, was just $470.

This year, preliminary IRS data from tax-year 2016 returns showed that about 4 million paid an average of just over $700 in penalty taxes, while more than 11 million claimed an exemption.

Given that a cheap Bronze plan for a 30-year-old costs more than $3,000 a year in premiums — and comes with a $6,000 deductible — it’s not surprising that millions decided to either pay the penalty or found ways to claim an exemption.

Further evidence that the ObamaCare mandate failed to achieve its goal can be seen in the enrollment data. For the ObamaCare exchanges to function properly, at least 40% of the enrollees needed to be 18-34. This year, just 27% were in this age group, which is down from 28% last year.

What’s more, the uninsured rate has started climbing again. Gallup’s quarterly health insurance survey finds that 12.3% said they lacked coverage in the first quarter of this year, which marks the second consecutive quarterly increase.

“The individual mandate has never been successful toward the objective of attracting people to the program,” notes industry expert Robert Laszewski.

Not only has the individual mandate failed to keep ObamaCare markets stable, it’s also ended up punishing mainly the working class.

As IBD’s Jed Graham noted, “the working class bore the brunt of ObamaCare individual mandate penalties this year,” and they “paid a lot more than the Congressional Budget Office anticipated.”

“Most of the $2.8 billion in fines paid through April appear to have come from people with modest to moderate income,” he found after analyzing the IRS data.

So, in other words, the working class are getting hit with a new tax they can ill afford,  because they can’t or don’t want to buy overpriced government-mandated insurance, which each year has seen double-digit premium increases thanks to ObamaCare’s rules and regulations.

That alone is reason enough to kill the mandate.


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Originally posted 2017-11-15 21:32:23.


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