High Court Allows National Health Care Tax
“The Affordable Care Act’s requirement that certain individuals pay a financial penalty for not obtaining health insurance, may reasonably be characterized as a tax. Because the Constitution permits such a tax, it is not our role to forbid it, or to pass upon its wisdom or fairness,” said Chief Justice John Roberts. With those words the U.S. Supreme Court, on a 5-4 vote, allowed the health care law, which also passed Congress by one vote, to stand as the law of the land.
It appears the Supreme Court has signed off on what is, in practical terms, a tax levied by the insurance industry on Americans for simply existing. Once that is understood, we are likely to hear renewed calls for a single-payer system, akin to the British National Health Care Service.
Reading the dissent from the bench, Justice Kennedy said the Act is invalid in its entirety. “It is true that if an individual does not purchase insurance, he or she affects the insurance market to a degree,” he said. “But the Government’s theory would make one’s mere existence the basis for federal regulation. There would be no structural limit on the power of Congress. As a result, the Government’s theory would change the relation between the citizens and the Federal Government in a fundamental way.”
The National Federation of Independent Business (NFIB) reacted to the Supreme Court’s decision to uphold the individual mandate with the following statement. “We are concerned about the precedent that this will set in Congress’ ability to mandate other aspects of our lives, but we will move forward from today to continue to fight, harder than ever, for real health care reform…”
“This day will go down in history as the day when Americans lost a part of their freedom — the freedom to choose what they want to buy with their own money,” said Karen Harned, Executive Director of NFIB’s Small Business Legal Center.
Here are some key items in the 2,700 page law:
Individual Mandate: Requirement that most Americans obtain health insurance or pay a fine, starting in 2014.
Employer Coverage Mandate: Require-ment that businesses with more than 50 workers offer coverage or pay a fine, set to take effect in 2014.
First Phase of Consumer Protections: Already in effect, a prohibition on lifetime limits for insurance coverage. No denying coverage to children based on pre-existing conditions. Restrictions on annual coverage limits. Second phase will usher in consumer protections, guaranteed coverage regardless of health, and a prohibition on annual coverage limits.
Medicare Plan Tax: An increase in the Medicare Part A tax rate by 0.9% for those making over $200,000 ($250,000 for households), set to go into effect in 2013.
Health Insurance Exchanges: The creation of state exchanges across the country where consumers can shop around for insurance plans, set to take effect in 2014.
Tax Credits: Tax credits and subsidies available to individuals making up to 400% of federal poverty line, for insurance coverage — set to take effect in 2014.
Kaiser Health News correctly summed up the politics of the decision, saying, “While the ruling removes some legal uncertainties, a slew of political and technical challenges remain. The law and today’s decision are sure to feature prominently in the run-up to the November elections and the law’s fate could well hinge on the outcome. If Democrats retain the presidency and control of the Senate, implementation will likely move forward. If Republicans sweep one or both, efforts to repeal or de-fund are sure to gain steam.”
“The election is two or three times the importance of court decision,” said Robert Laszewski, a consultant to the industry and former insurance executive.
The Farm Equipment Manufacturers Association will host a session on Friday, November 2, during the 2012 Fall Convention in Jacksonville, FL, dealing with the impact of this decision on our members. The session will provide advice to members on what they can do to protect their business and employees, regardless of the election outcome.