2/10/2013

Obamacare unraveling

Two op-ed pieces here and here provide useful discussions on Obamacare.

You can see why: If the lowest-cost family plan (again, two adults and three kids) is to run a whopping $20,000, and if the employee’s contribution is limited to $3,800, the employer’s tab would be $16,200 — adding about $7.40 an hour to the cost of that employee. Wisely, the IRS announced on Jan. 30 that employers won’t have to pay for dependents. 
But the Congressional Budget Office’s much-cited prediction that ObamaCare would leave only 30 million people uninsured by 2016 was based on the assumption that kids would be covered by employers. At the very least, employers insuring their workers for the first time to avoid the penalty are unlikely to do that. 
So how will the kids be covered? They won’t. The IRS shocked the law’s advocates by announcing that the insurance exchanges won’t provide subsidies for a child whose parent is covered at work. 
Nor will these parents be penalized for not insuring their children — the IRS will kindly consider the kids exempt from the mandate. 
Also exempt are millions of people who’ll stay uninsured because their state is wisely choosing not to loosen Medicaid eligibility. . . . .
and this
So, Lambert says, the ACA’s penalties are too low to prod the healthy to purchase insurance, even given ACA’s subsidies for purchasers. The ACA’s authors probably understood this perverse incentive and assumed that once Congress passed the ACA with penalties low enough to be politically palatable, Congress could increase them. 
But Roberts’s decision limits Congress’s latitude by holding that the small size of the penalty is part of the reason it is, for constitutional purposes, a tax. It is not a “financial punishment” because it is not so steep that it effectively prohibits the choice of paying it. And, Roberts noted, “by statute, it can never be more.”As Lambert says, the penalty for refusing to purchase insurance counts as a tax only if it remains so small as to be largely ineffective. . . . 

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