I don't get the argument you are making about free-riding, Fate. If there is someone in their 20s who has a decent income but doesn't want to make spend money on buying insurance they pay this tax (fine) because that makes economic sense for them. However, if that person gets seriously ill and they have no insurance they will significantly free-ride on the system; however, at least they will have remied the free-riding to some extent by paying the penalty (tax)

If you took 100 people in their 20s who did not buy the insurance and paid the tax-, then the tax paid by most of the 100 could come close to ultimately paying for the medical treatment of the few who would require extensive treatment. I think you are trying to make the argument that is just a way to have tax increases and it is nothing to do with the free-rider problem. But I think the proof that it was designed as a tax increase is pretty thin. The design is (1) have healthy people attractive to insurance companies get into the system, and (2) to a lesser extent cure the free-rider problem. Would the Administration be happy if everyone bought insurance? I think the answer is yes if you have some arguments to the contrary I would like to see them. Otherwise, if the preference would be to have everyone buy insurance then it is not a tax increase (it is simply a penalty and not designed to increase tax revenue)

Ricky:

For those audited (And whats that 5%?

Too funny!

ARJ, to answer your earlier question on regressivity. From Wikipedia:

Impose an annual penalty of $95, or up to 1% of income, whichever is greater, on individuals who are not covered by an acceptable insurance policy; this will rise to a minimum of $695 ($2,085 for families), or 2.5% of income, by 2016. ...Exemptions to the mandatory coverage provision and penalty are permitted... for those for whom the least expensive policy would exceed 8% of their income.

There's also a chart on cost sharing based on income as a percentage of poverty level which also varies based on family size. (I presume it will take complicaed tax forms to figure this out, thereby employing accountants or making average Joes very busy on April 14th.) As ARJ indicated, there's a premium cap as part of the calculation.

So, assuming 2016 and a family of 4, and using rough numbers since I don't feel like being that precise, here are 3 examples: 1. Someone making $32,000 a year, health insurance would be subsidized and they would only have to pay $1,000 per year for health insurance (the subsidy is over 90%). The penalty would be $2,085 they chose to go without insurance. It's hard to imagine that person making that decision.
2. Someone making $66,000 per year, health insurance would be subsidized but not that much; they would have to pay $6,300 per year in insurance (some subsidy) or incur a penalty of 2,085. (The penalty would be over $4,000 in Mass because you would have to pay both!). This is the middle income person that will get squeezed by the legislattion it seems to me. If someone wants to check my work on this I would appreciate it, but basically the high school graduate (that Freeman talks about in his other post) who works his butt off as a private contractor installing roofs on people houses or taking down their trees or fixing their septic system, who is an honest bloke who reports all of this income but doesn't have health insurance is not going to be happy.
3. Someone making $200,000 per year. Health insurance will cost about $11,000 (but it really depends on where you live -- in NYC it would cost about $18,000 according to a colleague I have talked to who live there. George?). The penalty/tax for non compliance would be $5,000 per year. ($7,000 if they live in Mass.)

Technically speaking the penalty is regressive because the family making $200K pays a lower percentage of income (2.5%) then the family making $66K (about 3%) then the family making $32,000 (about 6%). However, the family making $32,000 insurance is heavily subsidized.

Having run the numbers, I'm really scared about Obamacare. These penalty taxes are punitive and will hurt middle class families quite a bit. (The $66,000 family in our example.) It is also intensely complicated as you can see. If I was calculating the penalty for a client I would have to spend a few hours to make sure that I did it right costing poor Joe another several hundred dollars. Even more people will stop reporting all of their income if it is under the table.

The Republicans have not been able to put this complexity into a bumper sticker. Since it all phases in, it won't be fully understood until April 2017.

Too funny!

really? What percentage of tax returns are audited in a detailed fashion? (I file two tax returns annually, personal and corporate and I've only been audited once in the last 20 years...)

These penalty taxes are punitive and will hurt middle class families quite a bit.

The experience in Massachussetts is that less than 1% of people pay the tax.... What is your fear based on, squeezing this 1% punitively? Are you part of the 1%
(ANd how is it that republicans are once again forced to defend a group defined as 1%?)

The underlying problem is the cost of health insurance and under that the cost of health care. Period. I've often sat with Americans who ask about how much tax I pay, and what kind of insurance costs... Usually taxes are in the same range but my insurance costs for my wife and I are less than $180 a month. (For prescription and dental coverage) Your health insurance costs are enormous OR scanty.
Obama care isn't going to be as effective as national health care systems in Norway, Germany or even Canada at bending this curve but its at least a step in that direction.
The option seems to be status quo OR in Romney's case (based on his speech responding to the decision) every thing Obama care has but no way to pay for it and none of the interventions to bring down medical inflation..

Most polls show people want to get on with things... Even those who don't favour Obama Care just want to get on with things. I suspect because few see it affecting them personnally in a negative way. And thats probably true based on the Romney Care experience.

Of course I would be worried about regressive taxes, RJ. However, I just find it hard to believe that middle-class familieis don't already have insurance. If you're poor you may not worry about hospital bills, but the middle-class has a healthy fear of them To the extent this tax penalty falls on someone in the middle-class, it probably falls on single men and women in their 20 or 30s who have college degrees (and more able to afford to go out and buy insurance or pay the tax and the penalty is justified because of free-rider concerns) The poor are exempt from paying the tax and the young are covered up to 26 under their parents' policy. Assuming Ricky is correct and only 1% pay a panalty in Mass this seems like a relatively minor problem

Neal Andereth is middle class, and he has insurance that is catastrophic coverage only. This ACA requirements will cause him to pay more for insurance, or pay the penalty/fine/tax/assessment/duty/excise/toll. To me, that is directed specifically at the middle class who are responsible and have set aside money for for health issues.

It may not have been the intent of the ACA to punish those who are being responsible, but there is evidence this is what is happening.

rickyp wrote:purple

there's nothing the IRS can do except withhold a refund.

Thats not nothing. And the IRS can and does have the power to do much more to recover unpaid taxes... Thats why people fear the IRS....

Not in regards to the ACA tax. It is specifically written into the bill that way. This article from Forbes discusses it but the pertinent part it

Finally, there is the issue of whether the IRS can collect the tax if someone refuses to either buy insurance or pay the fine. The ACA says the IRS should enforce the law by imposing a tax penalty—but then effectively blocks the agency from using most of the tools it normally uses to go after tax scofflaws.

The ACA bars the IRS from bringing a criminal enforcement case against someone who refuses to pay the non-insurance penalty. And it makes it very difficult, if not impossible, for it to enforce a tax lien. Law professors Jordan Barry and Bryan Camp have a nice piece in Tax Notes explaining it all.

That leaves only one tool—the IRS can subtract the penalty from any refund it owes a taxpayer. But that applies only if the IRS happens to owe somebody a refund. These days, two-thirds of taxpayers get one, but it is usually their choice.

This is what Purple was refering to

Ricky:

really? What percentage of tax returns are audited in a detailed fashion? (I file two tax returns annually, personal and corporate and I've only been audited once in the last 20 years...)

It's funny because it's obvious to most people that when you make up statistics that are available on the web, you take away your credibility.

You are a sample size of one. Plus you live in a different country. Perhaps there is a better way to answer the question than extrapolating from your own experience.

freeman2 wrote:Of course I would be worried about regressive taxes, RJ. However, I just find it hard to believe that middle-class familieis don't already have insurance. If you're poor you may not worry about hospital bills, but the middle-class has a healthy fear of them To the extent this tax penalty falls on someone in the middle-class, it probably falls on single men and women in their 20 or 30s who have college degrees (and more able to afford to go out and buy insurance or pay the tax and the penalty is justified because of free-rider concerns) The poor are exempt from paying the tax and the young are covered up to 26 under their parents' policy. Assuming Ricky is correct and only 1% pay a panalty in Mass this seems like a relatively minor problem

I think that you are missing a couple of important points. First, ACA will impact the middle-income more than the 1%. People who make over $1 million tend to have gold plated health insurance plans that are fully tax deductible. However, there are many small business or self-employed people who are middle-income. They may have health insurance, but their plan may not satisfy the ACA requirements. That was my personal experience in Mass.

Second, the increased requirements for employers may result in many of them jettisoning their health insurance plans. These employers will have middle-income employees. There has been a lot of conservative press devoted to this, and I think you should read it with an open mind. Some of it is hyperbole, but some of it is convincing.

By the way, people who are 20 to 25 often have parents who are middle-income.

My point exactly RJ.

ray

It's funny because it's obvious to most people that when you make up statistics that are available on the web, you take away your credibility.

I estimated 5%, you noticed my ?
. I was high as it turns out.
But a credible estimate ..
Whats funny is that you didn't look the number up to correct me... Because you obviously thought I was amusingly low...

In truth, there might be only a 2% chance of audit.

http://www.forbes.com/sites/robertwood/ ... udit-risk/

Because you obviously thought I was amusingly low...

Bull! I knew you were ridiculously high, and you still are. http://wanderingtaxpro.blogspot.com/201 ... dited.html

(I'm a CPA with 12+ years tax experience.)

Ray Jay wrote:

Because you obviously thought I was amusingly low...

Bull! I knew you were ridiculously high, and you still are. http://wanderingtaxpro.blogspot.com/201 ... dited.html

(I'm a CPA with 12+ years tax experience.)

We really need a like button.

RJ, I am currently covered by Kaiser at work. Prior to my current coverage I paid an awful lot of money to Blue Cross as I either worked in either small firms (where I did not get coverage) or I was a sole practitioner. Paying $4,000 or $5,000 in after-tax income for health care coverage when you are not making that much money is painful. I did it because I was concerned that if I got seriously sick I wanted to receive whatever treatment was necessary and I did not want to go bankrupt because of high medical bills. If you’re middle-class getting adequate health care coverage should be a priority and if you are not getting it then you are taking unreasonable risks (in my opinion).

I will accept your concerns RJ that some middle-class Americans will have to pay more for their health-care coverage because of the ACA. But I believe that concern is outweighed by the fact that there will be something like 30 million Americans covered who previously did not have coverage. Those Americans will get better medical care and they will live longer. I think that as Americans we can rally around the idea that getting everyone covered (well a lot covered anyway) is good for America and outweighs concerns about a financial impact on the middle-class.

Lately I have been reading the brilliant biographical series by Robert Caro on Lyndon Johnson (if you haven’t read them, these books are a must read), Anyway, Lyndon Johnson was the Senate Majority Leader in 1957 and he was faced with an almost insurmountable political problem. He had previously voted with the South against every civil rights bill that had come up, but if he wanted to be president he had to get a civil rights bill passed that would soften liberal opposition to his candidacy (while at the same time not threatening his base of support in the South). He was able to see that Southern opposition to civil rights was least to a voting rights bill and while the original bill had a provision banning segregation in public accomodations he was able (in a series of brilliant political moves) to at least get a voting rights bill passed (though it turned out to be pretty weak in practice) Relevant to this discussion was what he told liberals which is that the main thing was to get something passed since there had been no civil rights bills passed in 85 years. The same is true of the ACA--we need to have something done on health care reform. ACA is something; it’s not perfect but it’s a start. We can improve on it as we go along and it may be better on cost controls than is supposed (Geojanes posed something a while ago that he thought the limitation on administrative costs for health insurance companies might help control costs). But it would be a disaster if the ACA was gotten rid of, because that would mean that health care reform would be dead in the water. There is nothing to say that we cannot try something else if the ACA turns out to ill-conceived reform. But Republicans have no alternative to tne ACA. We can endlessly critique what we think will happen with the ACA but by about 2018 we will have some answers.

freeman2 wrote:But it would be a disaster if the ACA was gotten rid of, because that would mean that health care reform would be dead in the water. There is nothing to say that we cannot try something else if the ACA turns out to ill-conceived reform. But Republicans have no alternative to tne ACA. We can endlessly critique what we think will happen with the ACA but by about 2018 we will have some answers.

100% false. It would not be a disaster. It would be a plus, economically and medically. And, Republicans have made several proposals to replace the ACA. By 2018, disaster will have already struck.

And, Americans don't like the ACA.

Watch Obama's ads. First thing you'll notice is they are mostly negative. He has nothing to brag about. Second thing you'll notice is he's not boasting about the ACA--his signature achievement! Why is that?

Because voters hate it.

Doctors? Not too much love either:

Eighty-three percent of American physicians have considered leaving their practices over President Barack Obama’s health care reform law, according to a survey released by the Doctor Patient Medical Association.

The DPMA, a non-partisan association of doctors and patients, surveyed a random selection of 699 doctors nationwide. The survey found that the majority have thought about bailing out of their careers over the legislation, which was upheld last month by the Supreme Court.

If Democrats, and the President, wanted to "improve" the bill, they shouldn't have been so smug in the first place. There are several GOP doctors in the Congress. How many were able to have input into the bill?

Zero.

How many Democrats will vote to repeal it?

More than zero.

It's politically radioactive.

***As a complete aside, while researching this, I found out Jim McDermott is a psychiatrist. That explains a lot.