Dive Brief:
- A new report by the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) finds that as many as 90% of the estimated 30 million uninsured Americans may be exempt from the Affordable Care Act penalty for not carrying insurance coverage.
- An increasing number of Americans are exempt from the penalty for a variety of reasons, including falling into the Medicaid coverage gap, being an undocumented immigrant or not having to file income taxes. Just 4 million people are now expected to pay the penalty.
- The per-person penalty is slated to rise to $695 or 2.5% of total household income, whichever is greater, by 2016. It is currently $95 per adult or 1% of total income.
Dive Insight:
It is not surprising that so many Americans are exempt from the Affordable Care Act's penalty for lacking health coverage. Since the penalty is assessed through information provided on income tax forms, undocumented immigrants, who make up as much as a third of America's uninsured, are by necessity exempt from the penalty (not to mention ineligible for ACA or Medicaid benefits in the first place).
Furthermore, a large share of poorer Americans can claim hardship exemptions. These may be people who do not make enough money to file federal income taxes; those who live in states that have chosen not to expand Medicaid; and people whose insurance plans were discontinued last year after failing to meet Obamacare coverage and cost-sharing requirements. Other exemptions exist for victims of domestic violence and other disruptive life events.
A weaker mandate could mean higher costs in the ACA's risk pools, as many of the exemptions are more likely to affect younger and healthier Americans. If the Halbig plaintiffs wind up winning their Supreme Court case, an additional 4 million people who receive subsidies to help them pay for their insurance plans will also likely be added to the exemption list, effectively nullifying the mandate.
Want to read more? You might enjoy this story about the Obamacare rulings in one graphic.
