Obamacare: A Taxing Decision

By Erin Drushel

[avatar user=”ErinDrushel” size=”thumbnail” align=”left”]Erin Drushel[/avatar]

In a highly-anticipated ruling, the Supreme Court of the United States decided 5-4 that the Patient Protection and Affordable Care Act (ACA or “Obamacare”) is constitutional.

In 2010, Congress passed the ACA, which was designed to get more Americans into the healthcare system and provide more affordable health insurance coverage.  The ACA was challenged as unconstitutional by twenty-six States, a number of individuals and the National Federation of Independent Business.

The Supreme Court ruled on two main issues: one, the constitutionality of the “individual mandate;” and two, the expansion of the Medicaid program for low-income Americans.  Both were upheld.

The controversial “individual mandate” – a key clause in the ACA – survived.  The “individual mandate” requires persons to purchase the minimum necessary health coverage or pay a penalty.  According to the Opinion of the Court, the penalty is constitutional as a tax, and, “[t]he Constitution does not guarantee that individuals may avoid taxation through inactivity.”

Opponents of the “individual mandate” argue that the ACA forces individuals to enter into commerce; i.e., the government forces you to buy health insurance.  The Supreme Court reviewed commerce versus taxation and ruled that individuals do have a choice: you can either buy health insurance or pay a tax.

It may not be a desirable choice, but it is a choice.

Common sense says that an insurance system cannot work effectively or inexpensively without a majority buying into that system.

In simplest terms, how is this any different than paying for car insurance?  You don’t plan on getting into a car accident, but you have to be insured against accidents in order to legally drive a car.  No one plans to get cancer, but who pays for it if you do?

Just buying insurance after you need it, and bailing once you don’t, breaks the system – payouts can’t exceed pay-ins.  Already, if those who are sick can’t afford it, the costs of their care are passed on through higher insurance premiums.

Bottom line: someone has to pay for it.

For me as a Canadian, this is a no-brainer.  At some point in your life, you will likely require healthcare that exceeds your immediate income or savings.  In Canada, I liked having my taxes “auto-magically” go to healthcare.  That way, when I was sick, all I had to worry about was getting better, not if I could afford it.  To me, that type of worry is absurd.  Yes, the Canadian healthcare system has its problems, but what system doesn’t?

With only 5 months until the presidential election, the Supreme Court’s decision is a real victory for Barack Obama.  It also could be a bed of nails for Mitt Romney and fellow Republicans, who vow to repeal the whole ACA if elected.  Now that the “individual mandate” has been labelled as a “tax,” the Republicans have more fuel for their anti-tax fire; whereas, President Obama can claim affirmation that he is “doing the right thing” for Americans.  It’s all in how you choose to look at it.

With that in mind, it’s almost amusing to think that, for a brief moment, the word “tax” was transformed into a celebrated word – rather than a four-letter one – in the halls of government.

After all, it’s the only reason that the “individual mandate” survived.

– Erin Drushel