It’s A Tax. Feel Better Now?

It’s been two weeks since the Supreme Court made its ruling on the Affordable Care Act (ACA), also known as Obamacare. Enough time has passed that scholars are beginning to take a much calmer, clearer view of the ACA and what it will mean. Digging past the politics, here are the things we need to know. Please be aware that this blog will not be concerning itself with the political or moral issues on health care for all. This blog is focusing only on two of the primary Constitutional and practical governmental outcomes.


The Court walked a fine line on this point, acknowledging both Congressional power to enact legislation that would expand Medicaid and each state’s ability to determine whether the new Medicaid expansion was practical for their state. Critics are concerned that this essentially removes Congressional power and hands it to the states, arguing that the states should not be free to ignore Congress. Supporters view this as an ideal compromise. Instead of handing down a mandate that a state might not be able to afford, even with the money that Congress is holding out as a carrot, each state can decide for itself whether the expansion will benefit its residents.


Chief Justice John Roberts, with his tiebreaking vote, determined that Congress was within its Constitutional right to tax citizens, and therefore the ACA mandate- with a tax, not a penalty- was approved. The Chief Justice essentially said that Americans can choose to pay for health insurance, or pay the tax, but they must do one or the other. The problem is that there is very little enforcement. The law was written with language explicitly preventing civil or criminal penalties against anyone who does not either purchase insurance or pay the tax. The IRS would be able to use basic collection measures such as calls and letters, but beyond withholding the tax penalty from any tax refund, there would be no means of collecting the penalty. Approximately 8 out of 10 taxpayers receive at least a partial refund, so the IRS could collect a portion of the penalty amounts due, but the government should not expect to receive anywhere near a full amount.

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