The individual mandate in President Obama’s health care law will cost 6 million taxpayers a total of $7 billion in 2016, according to new estimates by the Congressional Budget Office. The cost will then average around $8 billion from 2017 through 2022.
The health care law requires Americans to either purchase government-approved insurance or pay a penalty. The mandate starts in 2014, and the penalties fully go into effect in 2016. The CBO estimates that 30 million will be uninsured by that year, but most will be exempted from the mandate, because they are unauthorized immigrants, members of Indian tribes, or don’t earn enough income to file taxes, among other reasons.
Among those who will have to pay a mandate penalty, 4.7 million will have incomes below 500 percent of the federal poverty line, according to the CBO, which is projected to be $60,000 for individuals and $123,000 for families of four by 2016. Given that the Supreme Court ruled the mandate was a tax, this would be a direct violation of President Obama’s pledge not to raise taxes on those earning less than $250,000.
The CBO found that the Supreme Court’s additional ruling giving states the ability to opt out of the law’s expansion of Medicaid actually slightly increased the number of people subject to the mandate, because fewer people would be insured through the program.
The penalty, as CBO describes, is “the greater of: a flat dollar amount per person that rises to $695 in 2016 and is indexed by inflation thereafter (the penalty for children will be half that amount and an overall cap will apply to family payments); or a percentage of the household’s income that rises to 2.5 percent for 2016 and subsequent years (also subject to a cap).”
Because the penalties are somewhat progressive, though more Americans with incomes below 500 percent of the federal poverty level will be subject to the penalty, 55 percent of the cost of the penalties (or $3.8 billion) will be paid by the 1.2 million Americans above that income level.
This report does not account for the costs borne by Americans who decided to buy insurance to comply with the mandate rather than remain uninsured and pay the penalty.