Mandate myths

The health care mandate is just one piece of Obamacare/the Affordable Care Act (ACA) but it’s received outsized attention — and has been subject to numerous myths:

Myth 1: Everyone is required to buy insurance.

That’s not true. Over 80%* of Americans have insurance through their employers or receive insurance because they are in the military or are veterans or are poor or old. No one in these categories is required to buy individual insurance. 

(Actually no one at all has to buy health insurance because, if they fall under that provision and don’t buy it, they can pay the penalty instead. The penalty is far cheaper than the cost of insurance.)

*81% of Americans under 65 have insurance. People over 65 have single-payer coverage; i.e., Medicare (with some holding additional private insurance).

Myth 2: People who don’t have insurance will be forced to buy insurance they can’t afford. 

This is also untrue.

People with the lowest incomes are covered under Medicaid, which was expanded by the ACA for those with incomes up to 133% of the poverty level.

For those with incomes between 133% and 400% of the poverty level, subsidies are available so they can afford to buy health coverage in the new health care exchange.

There is a hardship exemption for those who don’t have insurance and say they can’t afford it.

And, as noted under myth 1, no one actually must buy health insurance, since they can pay the penalty instead.

Myth 3: Quite a lot of Americans will have to pay a penalty because they did not buy health care insurance.

To the contrary, 1-2% may have to pay a penalty.  As the House Ways and Means Committee reported:

The vast majority of Americans will never have to pay a penalty. The law anticipates that most people will have access to affordable health care through an employer, the Exchange or a public program and will take advantage of the opportunity to obtain or maintain such coverage.  In addition, there are three key exceptions to the penalty:

  • Those who are uninsured because their coverage is unaffordable
  • Those who are uninsured and do not file taxes because their incomes are too low
  • Those who would encounter “hardship” by paying the penalty”

By the way, in Massachusetts in 2009, 1% paid a penalty for not having insurance.

Myth 4: You can go to jail if you are mandated to buy insurance, don’t buy it and don’t pay the penalty/tax.

Not so. The ACA specifically bars criminal penalties. If one is in the 1-2% that would have to pay a penalty, the most that happens is that the money is owed on the next annual tax return or that you get a lower tax refund.

Myth 5: The money collected via the penalty/tax associated with the mandate adds up to a huge tax increase on the American people.

Not so.  According to the Congressional Budget Office, the tax benefits in the ACA “outpace the penalties by more than a factor of 10 ($686 billion versus $55 billion).”

(See also Politifact’s debunking of claims by Mitt Romney and Rush Limbaugh on deficits, debt, and taxes.)

Bonus: You may want to try out this nifty interactive tool on how your family is affected by the Affordable Care Act.

Amy Fried

About Amy Fried

Amy Fried loves Maine's sense of community and the wonderful mix of culture and outdoor recreation. She loves politics in three ways: as an analytical political scientist, a devoted political junkie and a citizen who believes politics matters for people's lives. Fried is Professor of Political Science at the University of Maine. Her views do not reflect those of her employer or any group to which she belongs.