Obamacare individual mandate: tax or penalty?

In the aftermath of Thursday’s Supreme Court decision to uphold the individual mandate in the Affordable Care Act, also called Obamacare, Democrats and Republicans have been waging a war of words on whether the provision involves a tax or a penalty.

The confusion appears to reside in the way Chief Justice John Roberts legally classified the individual mandate provision. By the letter of the law, the individual mandate could only be allowed to stand as a tax. But it does not fit the usual definition of a tax because it is not based on income or earnings.

In an MSNBC interview with "Daily Rundown" host Chuck Todd on Monday, Mitt Romney’s senior advisor, Eric Fehrnstrom, agreed that the individual mandate fee was not a tax. Fehrnstrom said it was a penalty to be paid only by those who could afford to buy health insurance but choose not to.

Former House Speaker Nancy Pelosi agreed. “It’s a penalty that comes under the tax code for the 1 percent, perhaps, of the population who may decide that they’re going to be free riders. But most people are not affected by that,” Ms. Pelosi said. “It’s not a tax on the — it’s a penalty for free riders,” according to the New York Times.

Republican presidential hopeful Mitt Romney is in a tough spot when it comes to the health care issue. The individual mandate in Obamacare was patterned after the same provision in the health care reform law Romney implemented in 2006, while governor of Massachusetts. Romneycare also imposes a penalty on those who decide against buying of health insurance, even though they can afford it.

“One of the few individuals who worked on health care reform under both Mitt Romney and President Barack Obama said on Friday that the controversial individual mandate provision was virtually identical in the bills signed into law by each of them,” according to the Huffington Post.

Support for Obamacare is growing now that the law has been upheld. And while Mitt Romney says he would try to repeal it if elected president, Romneycare has been working well in Massachusetts. More than 98% of the population there is now covered by affordable health insurance policies.

Massachusetts Gov. Deval Patrick said, “Here in Massachusetts for the last six years using a model just like national health care reform, the Affordable Care Act, we have reached 99.8 percent of children, over 98 percent of our overall population with insurance. We are healthier by any number of measures, the cost of health care has come down on a per capita basis, it has not busted the budget. There are more businesses offering insurance to their employees today than before health insurance went into effect, so all the list of horrors that Gov. Romney talked about, that the congressional Republicans have talked about were not actually reality here in Massachusetts where we have tried that.” According to ajc.

It’s hard for the Republicans to make a solid argument against Obamacare when it has been so successfully implemented on the state level. It’s even harder for Romney to distance himself from his signature achievement as governor of Massachusetts.

Despite the complaints from Republicans on Obamacare, there have been no details on what it would be replaced with if repealed.

However, the Ryan budget, which Mitt Romney supports, actually eliminates Medicare, replacing it with a voucher system that makes partial premium payments to profit-driven insurance companies. Such a policy could add millions more elderly Americans to the ranks of the uninsured, making the health care crisis worse, not better.

Some Obamacare supporters believe that Medicare-for-all is the solution to America’s health care crisis. The government run program enjoys overwhelming support from participants, and it operates with lower costs than for-profit health insurance plans.

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