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The Affordable Care Act’s Young and Forgotten

April 4, 2012 3 minute Read by Michael McMahan

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.


Author

Michael McMahan
Michael McMahan

Michael McMahan currently serves as Vice President of Corporate Planning and Development, overseeing all fundraising activities and events as well as integration of long-term revenue planning for Bush Institute and public programming work.

Previously, he worked as Vice President, Strategy and Planning. In this capacity he coordinated strategic planning and strategic partnerships across the Bush Center.  He also worked as Director, Institute Policy and Planning and as Program Manager for the Bush Institute’s economic growth initiative.

McMahan is a licensed member of the Texas Bar, and prior to joining the Bush Center he was an energy law litigator. He served in the George W. Bush Administration at the U.S. Department of Energy in the Office of Policy and International Affairs. He is a graduate of the University of Texas (B.A., Economics) and Southern Methodist University’s Dedman School of Law (J.D.).

McMahan serves on the board of the Dallas Urban Debate Alliance and is a founding board member of the Dallas chapter of America’s Future Foundation.

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