How Much Is The Obamacare Mandate Going To Cost You? by Grace-Marie Turner

By Frank Hill

We are going to keep looking for people far better qualified than us to help bring clarity and exposure to you about the convoluted Obamacare law and the regulations that are being written on a daily basis now to implement them for full rollout in 2014.

We have found Grace-Marie Turner of the Galen Institute in Alexandria, Virginia to be a straight-shooter when it comes to explaining health care issues in language most people can understand.

So we have taken the liberty of reprinting her op-ed below in the hopes that you learn more today about Obamacare than you knew yesterday…

Op-ed by Grace-Marie Turner, President of the Galen Institute published in Forbes on July 24, 2012.

‘So just how much is that new ObamaCare tax going to cost you?

For some people, a lot more than you have been hearing.

The individual mandate section of the health overhaul law outlines the structure of the “taxes” that must be paid by those who don’t buy government-approved health insurance – starting at $95 a year the first year for individuals.

Many people are thinking it will be much cheaper to simply pay the tax than to buy policies that will cost thousands of dollars more.

Most news reports have emphasized that refusal to comply with the health insurance mandate subjects these “scofflaws” to a “modest fee.”

But some citizens could face much higher tax taxes — $12,000 a year or more — for failing to comply.

Revealing one of the many inconsistencies in the Supreme Court’s decision on ObamaCare, the syllabus of the decision says that “The payment is not so high that there is really no choice but to buy health insurance.”

But, in fact, the annual tax will eventually for many people equal the cost of an expensive health insurance policy. According to a research arm of Congress, the Congressional Research Service, over time, “families will both pay higher penalties and reach the cap at lower income amounts.”

This new ObamaCare tax will, like the Alternative Minimum Tax, hit more and more people over time as incomes rise. The new taxes are complex and escalate depending upon a person or family’s income.

They have basically three tiers:

Flat Fee: The first tier for lower-income taxpayers is fixed, starting at $95 for calendar year 2014 (the first year the mandate is effective), $325 in 2015, and $695 in 2016 and beyond. The total family penalty is capped at 300% of this flat dollar tax — $2,085 in 2016 – for those earning less than about $110,000, according to the CRS. 

Percentage of income:  The next tier is based upon a percentage of income: 1.0% in 2014, 2.0% in 2015, and 2.5% thereafter. 

Cost of a basic health plan:  However, as household income increases, eventually the percentage tax will rise to equal the cost of the national average premium for a “bronze-level health plan,” where it is capped. (The bronze plan is expected to be the least expensive plan in the line-up of policies that will be offered through the ObamaCare health insurance exchanges. The Congressional Budget Office estimates that in 2016 the cost of a bronze-level plan for a family would be between $12,000 and $12,500 a year.) 

Buying insurance or paying the tax is portrayed as a neutral choice by Chief Justice John Roberts who wrote in his majority opinion “…imposition of a tax nonetheless leaves an individual with a lawful choice to do or not do a certain act, so long as he is willing to pay a tax levied on that choice’. 

Buy health insurance or pay a tax. Your choice. 

For example, a family earning $120,000 will face a tax of $3,000 a year if they don’t buy health insurance with the government’s stamp of approval. 

For some, it will make sense to pay the tax and take their chances since health insurance companies will be forced to sell them a policy when they need it at the same price as if they had been paying premiums all along. 

That will, of course, send the cost of health insurance soaring. Higher-income individuals face a much larger tax because, for them, the amount of the tax is determined by the cost of a government-approved bronze health plan. 

A family earning $500,000 a year pays 2.5% of its income in the tax and hits the cap at $12,500. 

The tax could be higher, of course, if the cost of this government-approved policy escalates. 

There are subsidies for some citizens through Medicaid and through new health insurance bureaucracies, plus exemptions for certain classes and categories, such as those qualifying for hardship or religious exemptions or whose incomes are less than the filing threshold for federal income taxes. 

Remember that the government will determine what health insurance policies meet its approval to satisfy the individual mandate. If citizens decide they prefer a different health plan, they would have to pay for that insurance as well as pay the new tax. 

There are significant new reporting requirements for individuals to prove to the IRS they have maintained qualified health insurance every month during the year, that any premium subsidies they are receiving are justified by their income and family size, and how much their employer paid for their coverage, for starters. 

The tax penalty will be collected by the IRS and extracted from any income tax refund due. 

The legislation, however, ties the IRS’ hands in using its normal collection tactics, such as liens, levies, and criminal penalties. Surely every family will be making its own calculations and cost-benefit analyses involving the health insurance mandate. 

McKinsey & Company has reported that as many as 30 to 40 million Americans could forgo health insurance, with some figuring they can purchase a policy whenever they are facing expensive medical bills. 

The individual mandate tax is only the newest in a long list of new Obamacare taxes, including a new 0.9% surtax on Medicare taxes for those making $200,000 or more ($250,000 joint) plus a new Obamacare 3.8% surtax on “investment income” for those in the same income categories. 

This added tax affects dividends, interest, rent, capital gains, annuities, home sales, partnerships, etc. Over time, these new ObamaCare taxes will hit more and more middle income families. 

Recall that the Alternative Minimum Tax targeted only 155 taxpayers when the first version passed in 1969, but today it hits millions of people. 

Now that the American people see that the Supreme Court didn’t rescue them from Obamacare, there is renewed focus on the details of the law. 

The individual mandate is only one of dozens of provisions that will slam into our economy, hitting American families like a freight train in 2014.’

Read online at Forbes

You can contact Grace-Marie Turner at The Galen Institute at the following address if you want to learn more or help support her efforts to ‘reform’ health care reform:

Galen Institute
P.O. Box 320010
Alexandria, VA 22320


  1. My thoughts on the encroaching communist menace that is Nobamacare:

  2. This is a simplified layman explanation. My head is both spinning and aching. As I quoted in a blog I once wrote: Obamacare is making me sick.

  3. I'm a bit suspicious of any 501c telling me what to think. It's very simple, we had a free-market health care system prior to LBJ's Medicare/Medicaid boondoggle. That's the pattern we should work towards.

    I find it interesting that McKinsey says that so many can forgo insurance. What's the angle with this company that was implicated in fixing the whole insurance market just a few years ago?

    I agree with this piece, but the knife to the Gordian Knot is to get rid of all of it. Cut the tumor of all of government health care and the festering boil of the IRS too while we're at it. That's my fantasy, anyway.

    1. Grace-Marie Turner is a recognized expert in health care matters.

      She has been instrumental in developing and promoting ideas for reform to transfer power over health care decisions to doctors and patients.  She speaks and writes extensively about incentives to promote a more competitive, patient-centered marketplace in the health sector.

      She testifies regularly before Congress and advises senior government officials, governors, and state legislators on health policy.
      She is a co-author of Why ObamaCare Is Wrong for America, published by HarperCollins in 2011 and editor of Empowering Health Care Consumers through Tax Reform.
      Grace-Marie served for a three-year term as a member of the National Advisory Council of Healthcare Research and Quality and served as a member of the Medicaid Commission, charged with making recommendations to modernize and improve Medicaid.
      She has been published in hundreds of major newspapers, including The Wall Street Journal and USA Today, and has appeared on ABC’s 20/20 and on hundreds of radio and television programs in the U.S. Grace-Marie speaks extensively in the U.S. and abroad, including at the London School of Economics, Oxford University, and the Gregorian University at the Vatican.

      Grace-Marie is founder and facilitator of the Health Policy Consensus Group which serves as a forum for analysts from market-oriented think tanks around the country to analyze and develop policy recommendations.

      She received the 2007 Outstanding Achievement Award for Promotion of Consumer Driven Health Care from Consumer Health World, and she serves on the board of the Association of Private Enterprise Education. In the mid-1990s, Grace-Marie served as executive director of the National Commission on Economic Growth and Tax Reform. For 12 years, she was president of Arnett & Co., a health policy analysis and communications firm. Her early career was in politics and journalism, where she received numerous awards for her writings on politics and economics.

  4. .

    How Much Is The Affordable Care Act Going To Benefit You?

    The people of USA can expect to benefit greatly from ACA. As ACA is implemented over the next years, more benefits will become available. ACA can be expected to be adjusted to meet the peoples' needs.

    Ema Nymton

    1. How do we pay for all of it, Ema?

    2. .

      "How do we pay for all of it, Ema?"

      Through taxes, of course. The people willingly pay for Social Security, Medicare, and all other positive social welfare programs by paying their fair share of taxes because we know, paying taxes are privileged of being a part of society. ACA is a part of USA's high quality modern society that people support.

      Ema Nymton

    3. Just shaking my head and wondering if I can interest you in a bridge Ema.

    4. .

      Why? Are you one of those who believe you are entitled to receive benefits without paying for them? Are you one of the something for nothing RepublicanT Party types?

      Ema Nymton

    5. No. Are you one of those something for nothing Democrats? Are you one of those who believes you're entitled to receive benefits w/o paying for them just because you happen to be breathing?

    6. .

      "… something for nothing Democrats?" Just out of curiosity, 'Who brought up the subject of paying more taxes?'

      I am so radically liberal/progressive that I believe in paying more taxes for the earned benefits of living in a modern society. It is after all, we the people's government (our society) we are talking about.

      It has never made sense to have the poorest in _our_ society to pay the taxes for Paris Hilton (You know, like eliminating social welfare benefits for the poorest to pay for tax breaks for the wealthiest.)

      The whole argument of the above article falls apart (and will always fall apart) because the writer tries to address only the cost side of the issues and never the benefits. It also does not help that the writer tries to make 'government' sound like a foreign entity in USA.

      Ema Nymton

    7. Benefits indeed have cost associated with said benefit(s). The cost side must be addressed as in cost/benefit analysis. Finding a rational balance is the key. Something the present and past administration failed to do. Actually it goes back even further.

    8. Ema: Please enlighten us all:

      'What is the 'fair share' EXACTLY any single person should pay in federal income taxes (on top of their payroll taxes) to support the massive weight of social programs you want?

      How about 15% for every single person in this nation?

      Including everyone who is now NOT paying any federal income tax.

      Including everyone who can afford massive armies of tax accountants and lawyers to get their effective tax rates down to around 10%.

      What say so? What is the magic number, please?

    9. By the way, just an addendum so everyone is very clear on what is going on with SS and Medicare, there is not ONE PERSON now alive who will have paid enough in payroll taxes to cover all the benefits they will receive in their lifetimes in SS retirement and/or Medicare Part A or B or D benefits.

      Not a single solitary person.

      Medicare is 85% subsidized by 'other taxpayers' including payroll payments each month plus general revenue transfers to keep A and B an D afloat.

  5. "Buying insurance or paying the tax is portrayed as a neutral choice by Chief Justice John Roberts who wrote in his majority opinion “…imposition of a tax nonetheless leaves an individual with a lawful choice to do or not do a certain act, so long as he is willing to pay a tax levied on that choice'.

    i would disagree with that statement. in order for choice to exist it must include the choice of saying no to any and all options. all this allows is preference of options.


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