The costs and benefits of the Patient Protection and Affordable Care Act, currently being heard by the Supreme Court, have been bally-hooed about...
The costs and benefits of the Patient Protection and Affordable Care Act, currently being heard by the Supreme Court, have been bally-hooed about for two years. However, the legal standing in this case boils down to just one clause of this lengthy bill. After parsing through the political and emotional rhetoric, a very basic and important economic question remains: Who is actually economically affected by the individual mandate? Those attending the hearings report that the Court will readily dismiss the issue of whether the mandate is a tax or a penalty. The plain reading of the Act states it is a penalty, and the issue of whether to interpret it any other way is a non-starter. In practice however, whether the mandate is a tax or a penalty really does not make much difference, the result is the same. Unlike FICA payroll taxes, the individual mandate penalty does not contain a deduction benefit. It is penalized against a finalized IRS tax return. So, regardless of how it is categorized, the end result is a transfer of between $95 and $695 from an individual to the federal government with no off-set. It is estimated that the number of uninsured, non-elderly Americans after enactment of the new law is 26 million. That leaves 26 million people exposed to this new penalty, and total penalties potentially in excess of $2.5 billion. Undoubtedly, this penalty will be imposed most often on those Americans with incomes too high to qualify for government assistance, but too low to afford health care on their own — in essence, our young, healthy, entry-level working class. They are the forgotten men and women of the 21st century. In sum, while the Court spends its time mulling over the boundaries of the health-care market and the applicability of the commerce clause, America’s youthful lower-middle class awaits with a hand on their pocketbooks. These forgotten youth are the future, and their successes or failures are a major factor in sustaining the long term growth of this nation. Without them, 4% growth is merely a pipe dream.