Rep. Steve Pearce, R-N.M., said he voted recently in the House to repeal the federal Affordable Care Act in part because if the law “is fully implemented, average New Mexican families will be forced to pay roughly $4,700 a year in new taxes alone.”
Jason Heffley, Pearce’s spokesman, said in an email exchange that Pearce believes the law’s requirement that people buy health insurance or pay a penalty transforms the purchase of insurance into a tax, even if the taxpayer wants to buy insurance anyway.
The Kaiser Family Foundation and the Annenberg Public Policy Center’s FactCheck.org website agree the most a household will be penalized for not buying health insurance is $2,085 beginning in 2016. The penalty, which the Supreme Court described as a tax, increases with inflation thereafter.
Why the discrepancy?
Partly it is the way Pearce views taxation. Partly it is in the data Pearce uses and the way he calculates the tax.
About 85 percent of all Americans have some form of health care coverage. A Gallup survey found that about 45 percent of Americans receive their insurance through an employer. More than 70 percent of high-income Americans receive their coverage through their employers.
Heffley said once the court ruled that Congress’ power to tax renders constitutional the requirement that most Americans be required to buy insurance, the purchase of insurance became a tax, even if the purchaser had every intention of continuing to buy health insurance for the indefinite future.
“The Supreme Court ruled this mandate a tax,” Heffley said in his email. “Thus any cost associated with the mandate is a new tax. We are not saying that individuals were not going to buy insurance. We are saying that now they are mandated, taxed and forced to do so.”
He continued, “Point is that if the court is going to rule this a tax, any cost associated with the mandate, including purchasing insurance, is a new tax.”
To calculate the tax, Pearce focuses on the provision of the law exempting people from the mandate to buy insurance if the cheapest plan available exceeds 8 percent of their income. To Pearce that means, “American families will be taxed up to 8 percent of income every year to have health care,” Heffley said.
Heffley said Pearce used census data to determine the median family income in the United States is $67,019. He multiplied that number by 7 percent and got $4,691.30.
The 2010 census found that the median household income nationally was about $52,000 and about $42,000 in New Mexico.