The Supreme Court decision on the Affordable Care Act handed journalists something of a semantic dilemma. What do we call the sanction against people who do not buy the required health insurance? Is it a tax or a penalty? What should we call it in our stories?
In upholding the constitutionality of the law, Supreme Court Chief Justice John Roberts wrote that, “It is of course true that the Act describes the payment as a ‘penalty,’ not a ‘tax.’” But, he added: “The exaction the Affordable Care Act imposes on those without health insurance looks like a tax in many respects.”
Given Roberts’s opinion—and the fierce GOP effort to amplify that part of his ruling—it is hardly surprising that a new Quinnipiac poll last week found that 55 percent of the voters believe the sanction is a tax hike. Thirty-six percent said it was not.
Still, even Mitt Romney’s camp has shifted on this one. At first the candidate, who has his own history with a healthcare mandate in Massachusetts, did not believe that the sanction should be called a tax. Two days later Romney flip-flopped, declaring it a tax after all. The Obama administration, of course, prefers to call it a penalty, not a tax. “The law is clear, it’s called a penalty,” said the White House chief of staff, Jack Lew. The president’s press secretary, Jay Carney, argues, “It’s simply a fallacy to say that this is a broad-based tax.”
The operative words here may well be “broad-based.” In other words, the president’s people argue, it’s not a cost that applies to just about everyone, like income taxes, for example. Lew and Carney both argue that that the sanction is a penalty because only about one percent of the people who can afford insurance and choose not to get it will have to pay something. The Congressional Budget Office estimates that some 4 million people will be so affected, though the precise number won’t be known for years, since deciding whether to buy insurance or take the sanction will involve messy financial calculations for many families.
How does it work? The Affordable Care Act, on the grounds that the new system won’t work if too many citizens bypass health insurance, envisions some financial discomfort for those who don’t buy the required coverage. By 2016, when the phase-in is complete, the penalty will be the greater of a set amount—$695 for each uninsured adult in a family, and 347.50 for each child, up to $2,085, or a percentage of income—2.5 percent of family income, up to $12,500.
The Kaiser Family Foundation has a pretty good flow chart for figuring out what this will mean in dollars and cents for families of various incomes and situations as the law rolls into full effect between 2014 and 2016. In 2016, for example, a husband a wife with two kids and an income of, say, $70,000 would have to pay $2,085 (695 x 2 adults plus $347.50 for two kids). Last fall, meanwhile, a survey by Kaiser found that premiums for family coverage provided by employers averaged about $15,000.
Some families will decide that the risk of going bare is too great, and opt for coverage. Others may decide that taking the penalty is cheaper than paying a premium, and gamble on no coverage. Still others might qualify for government subsidies that diminish the financial burden. What people will do is a story for another day.
The question for journalists now is, if people opt out of insurance and instead decide to pay, what do we call the darn thing they are paying? It seems to me The Associated Press got it about right. A piece by Stephen Ohlemacher describing the limited ability of the IRS to actually collect monetary penalties from those who don’t buy insurance, referred to it as a “penalty—or tax.” Calling it a tax penalty or a penalty tax should do the trick.