Thursday, June 28, 2012

ObamaCare Mandate is a Legal Tax. But is the RomneyCare Mandate a Tax?

The Affordable Care Act (ACA, aka ObamaCare) and the Massachusetts Health Care Reform Law (RomneyCare) are inherently different, but do have a few similarities. 
Romney funded his primarily with revenue from the federal government. 
The Obama method uses a mixture of new taxes and savings from changes to Medicare. 
The Massachusetts plan was designed to expand coverage to the roughly 60,000 uninsured in that state; Obama’s includes mechanisms to help control health-care costs.
There are several similarities between the two acts. I have done my best to remove any bias and present an honest comparison of the two laws.

The Supreme Court (SCOTUS) decision today has declared the ACA individual mandate (the requirement on Americans to have or buy health insurance beginning in 2014 or face a penalty) Constitutional "as a tax." 
There are a lot of questions and comments as to whether or not that makes the RomneyCare mandate a tax as well. 
THIS IS MY OPINION AND MY OPINION ONLY. But no, I do not think it is the same thing. This gets down into the nitty gritty of laws, so bear with me here. 
Originally the way the ACA was explained it did not create a mandate for individuals, it creates tax incentives for individuals to purchase coverage (or in other words, penalized the uninsured). This is the key detail SCOTUS caused the uproar over. 
RomneyCare, however, puts responsibility on individual to buy insurance, while also creating employer penalty for not providing insurance. 
The ACA tax penalty will be $285 per family or 1% of income, whichever is greater, when it goes into effect in 2014. By 2016, it goes up to $2,085 per family or 2.5% of income.
The Massachuesetts law penalizes individuals $295 per person, but increases monthly. It is important to note, the penalty was opposed by Romney.  
The key differences- the ACA penalizes people for not being able to afford coverage, or for choosing not to carry coverage. 
The Massachusetts version gives employers incentives to provide coverage. If an individual can afford it, and chooses not to carry it, they are penalized.
In other words, under Obama, it doesn't matter if you wanted it or not, or if you can afford it or not, if you don't have it, you get taxed. Under Romney, if you can't afford it, because your employer isn't making it available to you, your employer gets penalized. If you can afford it, and choose not to carry it, you pay a fee or mandate. 
Chief Justice John Roberts summarized it as such, "The Federal Government does not have the power to order people to buy health insurance. ... The Federal Government does have the power to impose a tax on those without health insurance."
Because the MA Health Plan is an opt-out situation, (pay a fee to opt-out), I do not believe this mandate would be considered a tax.
But, like I said, that is just my personal opinion. There are people with more legal experience than myself out there reading all of the summaries in much greater detail who will soon take to the talking head shows to debate otherwise, I am sure.
Overall, many aspects of this law are good and will help many people. No denying special conditions or pre-existing conditions? GOOD! Allowing young adults to stay on parents insurance longer? Kinda good. (I am all for SMALLER GOVERNMENT. I would prefer to have seen consumers put the pressure on companies to do this, or for the companies to do it on their own- which could have happened. But instead, no, people went whining to Big Brother to make it happen. And now the government is telling businesses what to do. And that very rarely ends well.) Flexible Spending Accounts getting messed with- VERY BAD. Requiring more breastfeeding rooms? Meh. Sure, a good thing, but again, did it require a law?? Calories on menus? Again, meh. It's good, but did it really need the Supreme Court, Congress, and the President to make that happen? Talk about making a federal case out of something.

As for the rest of the differences between RomneyCare and ObamaCare- see below.

RomneyCare- Massachusetts Health Care Insurance Reform Law 2006 ObamaCare- Patient Protection and Affordable Care Act and Health Care and Education Reconciliation Act of 2010
Offers subsidies to residents with income up to three times federal poverty level Offers tax credit to Americans with incomes up to four times the federal poverty level.
Extends coverage to low-income state residents through federal-state Medicaid. Extends Medicaid eligibility to low-income Americans.
Eliminates annual caps on coverage, limits maximum amount that consumers pay annually. Eliminates lifetime and annual caps on coverage, limits annual maximum to consumers.
Requires employers with 11+ workers who do not offer insurance to pay a penalty. Requires employers with 50+ employees to offer insurance or pay a penalty if at least one of their workers receives a tax credit to buy coverage.
Makes investments to improve wellness, prevention, and public health. Makes investments to improve wellness, prevention, and public health.
Created online marketplace for small employers to compare plans and options, saving admin costs. Created online marketplace for small employers to compare plans and options, saving admin costs.

70 pages long 2,074+ pages long
Main goal: insure everyone in the state Main goal: regulate and control costs of healthcare industry
Did not raise taxes Creates new taxes of $500 billion on individuals and businesses
Does not cut Medicare Cuts Medicare by $500 billion
No affect on Medicaid Gives Medicaid more liberally
1.8% of state uninsured (provided opt-in, opt-out) 16.7% of US still uninsured
Romney vetoed employer penalty (legislature over-rode later) Penalizes and requires employers to offer different types of insurance
Cost the state 1% of budget Will cost $2 trillion
Puts responsibility on individual to buy insurance, while also creating employer penalty for not providing insurance. ($295 per person, but increases monthly (opposed by Romney) No mandate for individuals, creates tax incentives for individuals to purchase coverage (penalizes the uninsured)
Did not lower healthcare costs (did insure everyone) Main goal is to reduce healthcare costs (does so by passing the expense to employers)
Deregulated a complex overly regulated state program. It is still heavily regulated, but much less so. Raised the costs of private health insurance premiums by 9% in one year (even before enacted). Expected to eventually raise premiums 55-85%.
Romney opposed the Commonwealth Health Insurance Connector Authority, also known as the Health Connector. Among other roles, the Connector acts as an insurance broker to offer private insurance plans to residents. Obama plan is based around this regulatory exchange, imposing many requirements on what is considered “minimum creditable coverage” (for instance, contraception)
Romney supported a bare bones policy that covered hospitalization and catastrophic illness. Obama plan imposes several requirements on what is considered “minimum creditable coverage” (for instance- contraception)

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