3 million in middle class to pay health law penalty

Some 3 million middle-class Americans will be required to pay a penalty for not getting health insurance under the Obama administration’s new health care law, raising questions about the president’s willingness to break a campaign promise by increasing taxes on some families earning less than $250,000.

A Congressional Budget Office analysis released Thursday said the average cost of the penalty will be slightly more than $1,000 apiece in 2016.

Republicans chided the Obama administration for hurting middle-class Americans.

“The president and his supporters in Congress are celebrating the benefits of health reform, but they also have an obligation to acknowledge the other side of the coin,” said Sen. Charles E. Grassley of Iowa, the top Republican on the Senate Finance Committee. “There’s a price for not participating, and people will pay it.”

Mr. Grassley added that the penalty is nothing more than a tax and breaks the president’s campaign pledge not to raise taxes for those making less than $250,000 a year.

But Rep. Pete Stark, California Democrat and chairman of the House Ways and Means health subcommittee, said Republicans are exaggerating the extent of the penalty, adding that out of a population of 277 million people less than 1.5 percent will pay this assessment in 2016.

“Americans can opt to pay the penalty rather than purchase health insurance, but it is their choice,” Mr. Stark said. “There is no penalty for people whose insurance would cost more than 8 percent of their income.”

Democrats argue that the mandate and the penalties are necessary parts of a massive overhaul designed to expand coverage to millions who now lack it.

“The new law will make health insurance affordable for everyone, and CBO’s analysis confirms that the vast majority of uninsured Americans will find health care affordable and choose to participate,” said White House spokesman Nick Papas.

About 95 percent of Americans will have coverage under this law in 2016, compared with 83 percent today, Mr. Stark said.

“If Republicans really cared about expanding health coverage, they would have worked with us on health reform or introduced a bill that would have reduced the number of uninsured,” he said.

The health care reform legislation, signed into law by President Obama last month, requires that most U.S. residents obtain health insurance and imposes a financial penalty for being uninsured.

Almost 4 million total Americans will have to pay the penalty when the plan is implemented in 2016. About 3 million of those people will have incomes below $59,000 for individuals and $120,000 for families of four, the CBO says. Another 900,000 people who must pay the fine will have higher incomes.

Americans who don’t get qualified health insurance will be required to pay penalties starting in 2014, unless they are exempt because of low income or religious beliefs, or because they are members of American Indian tribes. The penalties will be fully phased in by 2016.

The CBO estimates that about 21 million non-elderly residents will be uninsured in 2016 but that the majority of them will not be subject to the penalty.

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