Nearly six million U.S. residents are expected to pay a tax penalty under the Affordable Care Act for not purchasing health insurance in 2016, two million more individuals than estimated in April 2010, according to a report released Wednesday by the Congressional Budget Office (CBO).
CBO said about 85% of the increased estimate could be attributed to changes in projections for the economy and the effects of the ACA since it was enacted. CBO said the Supreme Court's decision to allow states to opt out of the Medicaid expansion accounts for the remaining 15%, because some states will forgo the expansion, increasing the number of uninsured residents.
Overall, about 30 million non-elderly individuals are expected to be uninsured in 2016, but only about one-fifth of those will pay the penalty, the report estimated.
The majority of those individuals—between 18 million and 19 million—will be exempt from the penalty. For example, undocumented immigrants, American Indians, and low-income individuals do not have to pay the penalty. Many of the remaining uninsured residents will not have to pay the penalty because of a hardship or their religious beliefs.
The penalty for not buying insurance will be either a flat rate of $695 in 2016 or 2.5% of household income, whichever is greater, and will increase over time. Altogether, the budget office estimates that the federal government will collect about $7 billion in revenue from the penalty in 2016 and about $8 billion annually from 2017 to 2022, an increase of about $3 billion from its previous estimates.
According to Reuters, the 50% increase will draw criticism from Republicans looking to repeal the ACA and who argue that the penalty is a government intrusion into U.S. residents' lives. House Ways and Means Committee Chair Rep. Dave Camp (R-Mich.), who opposes the law, said the new estimates show more "bad news and broken promises" from the ACA.
However, Erin Shields Britt, an HHS spokesperson, said the new analysis "doesn't change the basic fact that the individual responsibility policy will only affect people who can afford health care but choose not to buy it." She noted that 98% of U.S. residents would not be affected by the law's tax penalty (AP/New York Times, 9/19; Baker, "Healthwatch," The Hill, 9/19; Dixon/Morgan, Reuters, 9/19; Ethridge, CQ Today, 9/19 [subscription required]).
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