New Republican Tax Law Kills Obamacare Mandate

By Terence P. Jeffrey | December 20, 2017 | 3:35 PM EST

House Speaker Paul Ryan speaking after the House passed the tax-reform bill, Dec. 20, 2017. (Screen Capture)

(CNSNews.com) - The tax reform bill that the Republican Congress passed today and sent to President Trump for his signature kills that individual mandate to buy health insurance that was put into law by President Obama’s Affordable Care Act.

It does that by abolishing the penalty—which Chief Justice John Roberts called a “tax”—that the law imposed on people who did not comply with the Obamacare mandate that they “shall” buy health insurance coverage.

“With this bill, were are finally restoring the freedom to make our own healthcare choices,” House Speaker Paul Ryan (R.-Wisc.) said on the House floor on Tuesday.

“By repealing the individual mandate at the heart of ObamaCare, we are giving back the freedom and the flexibility to buy the healthcare that is right for you and your family,” Ryan said.

In 2012, the Supreme Court heard the case of NFIB v. Sebelius, which challenged the constitutionality of the federal government forcing people to buy health insurance.

The Obama administration made two contrasting arguments for why the court should rule in favor of the mandate. The first was that the Commerce Clause, which gives Congress the power to regulate interstate commerce, empowered the federal government to force people to buy products the government wanted them to buy.  If the court determined the Commerce Clause did not give the federal government that power, the Obama administration asked it to accept it second argument: that the mandate was a legitimate use of the federal government’s taxing power because the “penalty” for violating the mandate was really a federal tax.

In an opinion written by Chief Justice John Roberts, the court ruled that the Commerce Clause did not give the federal government the power to order people to buy things.

“The Framers gave Congress the power to regulate com­merce, not to compel it, and for over 200 years both our decisions and Congress’s actions have reflected this un­derstanding,” Roberts said. “There is no reason to depart from that un­derstanding now."

“The individual mandate forces individuals into commerce precisely because they elected to refrain from commercial activity,” he wrote on behalf of the court. “Such a law cannot be sustained under a clause authorizing Congress to ‘regulate Commerce.’”

But, then, Roberts turned around and accepted the Obama administration’s argument that the “penalty” that the Obamacare law imposed on people who did not comply with the law’s order that they “shall” buy health insurance was really a “tax.”

Under this logic, the government was not abusing its power by forcing people to buy a product they did not want to buy, it was merely giving them a choice: Buy the product, or pay a “tax” the government has the constitutional authority to impose on you.

Section 11081 of the tax law the Republican Congress passed today is titled: “Elimination of Shared Responsibility Payment for Individuals Failing to Maintain Minimum Essential Coverage.”

This section of the new law holds that the “shared responsibility payment”—or the “penalty” or, as the Chief Justice Roberts called it, the “tax”—shall be reduced from 2.5 percent to “zero percent.”

Because the court has held that the federal government to cannot force people to buy health insurance but can only tax them for not doing so—and because Congress has now eliminated that tax--Obamacare’s individual mandate is essentially repealed.

However, under the new law, the repeal will not take effect until Dec. 31, 2018.

On the House and Senate floor on Tuesday, Republican members pointed to the language repealing the Obamacare-mandate penalty as a significant triumph.

“By erasing this individual mandate tax, we will give Americans both tax relief and healthcare flexibility—two things that ObamaCare failed to provide,” said Senate Majority Leader Mitch McConnell (R.-Ky.).

Sen. John Barasso (R.-Wyo.) noted that repealing the mandate did not take away anyone’s insurance.

“It takes ObamaCare from being a mandatory program to turning it into a voluntary program,” Barasso said.

“More than 6 million people paid that tax in the United States this past year,” he said. “These people will now get a tax break.”

“It doesn’t take away anyone’s insurance, as Democrats have claimed,” he said. “It just says that nobody should have to pay an extra tax just because they decide that overpriced ObamaCare insurance isn’t right for them.”

Sen. Pat Toomey (R.-Pa.) said the mandate showed what a poor product Obamacare was in the first place.

“Our Democratic colleagues have described this repeal as a stake through the heart of ObamaCare,” Toomey said. “Think about what a damning indictment that is about ObamaCare.”

“If the only way ObamaCare can survive is if people are forced to buy the product against their wishes, what kind of product could that be?” he said. “What kind of business model depends on forcing people to buy your product because they will not buy it if it is voluntary?”

The Joint Committee on Taxation determined that repealing the penalty used to enforce the individual mandate would actually save the federal government $314 billion over the next ten years.

 


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