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6.6 million Americans were forced to pay ObamaCare's individual mandate tax for 2014

07/16/2015

More Americans paid ObamaCare's individual mandate tax for 2014 than previously estimated, according to a new report from the Internal Revenue Service's National Taxpayer Advocate. In January, the Treasury Department projected that up to 6 million households would be subject to the tax because they did not purchase a government-approved health insurance plan.

For 2014, the ObamaCare individual mandate tax -- also known by its Orwellian name, the "Individual Shared Responsibility Payment" (ISRP) -- was set at 1 percent of gross household income or $95, whichever amount was greater. The tax for not having coverage in 2015 is 2 percent of gross household income or a minimum of $325.

The report, released on Wednesday, found that 6.6 million Americans paid the tax for 2014. "[T]axpayers filed about 6.6 million returns reporting the ISRP," the IRS noted in a press release, "and the average amount reported was about $190," over $1.2 billion in total.

More than 300,000 Americans overpaid the ObamaCare tax to the tune of $35 million. "Most of those taxpayers did not owe the ISRP because they were eligible for an exemption due to their low incomes," the release states. "The report says the average ISRP overpayment was a little over $110 per return." The National Taxpayer Advocate recommended that the IRS issue refunds to these filers without requiring an amended tax return because "most would probably spend more than the roughly $110 average overpayment amount in preparer fees if amended returns are required."

In February, White House Press Secretary Josh Earnest scoffed at a reporter's notion that "millions of Americans" would face a tax bill because of ObamaCare. "I don't know what statistic you're citing when it comes to millions," Earnest said. "I don't think that that's accurate, at all."

Well, as it turns out, it was accurate. More than 6 million Americans paid a tax that they would not have otherwise had to pay if it were not for ObamaCare's individual mandate. The administration may claim that the tax is needed to offset the cost of uncompensated care, hence the Orwellian name of the tax. But, as Avik Roy explained, so-called "free-riders" account for under 2 percent of total national healthcare expenditures.

"Obamacare’s individual mandate doesn’t allow people to buy inexpensive insurance focused on emergency care: instead, it forces people to buy comprehensive insurance packages with a generous list of basic benefits, benefits far exceeding those required to address the issue of uncompensated emergency room care," Roy wrote. "You’re not going to the emergency room to get a mammogram. Hence, a significant portion of the individual mandate—the portion that requires people to buy insurance exceeding ER care—has nothing to do with the policy problem of uncompensated care."

Healthcare reform could have been done in a way that made access to health insurance coverage more affordable without $1 trillion in subsidy payments and a host of new taxes, including the individual mandate. Senate Majority Leader Mitch McConnell (R-Ky.) is considering reconciliation to repeal ObamaCare. While this is welcome news, congressional Republicans need an alternative, one based on patient-centered healthcare, to show Americans that affordable and quality coverage can be accomplished without a slew of new regulations, mandates, and taxes that leave families facing higher premiums and costly tax bills.