Nearly 4 million to pay health-insurance penalty

April 23, 2010 at 12:00a.m.

Associated Press

WASHINGTON

Nearly 4 million Americans — the vast majority of them middle class — will have to pay the new penalty for not getting health insurance when President Barack Obama’s health-care overhaul law kicks in, according to congressional estimates released Thursday.

The penalties will average a little more than $1,000 apiece in 2016, the Congressional Budget Office said in a report.

Most of the people paying the fine will be middle class. Obama pledged in 2008 not to raise taxes on individuals making less than $200,000 a year and couples making less than $250,000.

Republicans have criticized the penalties, even though the idea for a mandate was originally proposed by the GOP in the 1990s and is part of the Massachusetts health-care plan signed into law in 2006 by then Gov. Mitt Romney, a Republican. Attorneys general in more than a dozen states are working to challenge the mandate in federal court as unconstitutional.

“The individual mandate tax will fall hardest on Americans who can least afford to pay it, many of whom were promised subsidies by the Democrats and who the president has promised would not pay higher taxes,” said Rep. Dave Camp of Michigan, the top Republican on the tax-writing House Ways and Means Committee.

Democrats argue the mandate and the penalties are a necessary part of a massive overhaul designed to expand coverage to millions who now lack it. They point out that getting young, healthy Americans in the insurance pool will reduce costs for others.

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, religious beliefs, or because they are members of American Indian tribes. The penalties will be fully phased in by 2016.

About 21 million nonelderly residents will be uninsured in 2016, according to projections by the CBO and the Joint Committee on Taxation. Most of those people will be exempt from the penalties.

Under the new law, the penalties will be phased in starting in 2014. By 2016, those who must get insurance but don’t will be fined $695 or 2.5 percent of their household income, whichever is greater.

After 2016, the penalties will be increased by annual cost-of-living adjustments.