Rep. Ryan’s Budget Proposal Embraces an Element of the Landmark Health Care Law, Notes Simon Lazarus

Editor's Note: The Washington Post's Ezra Klein points out in a "Department of Corrections" post that Rep. Ryan's budget plan contains one, not two provisions that mirror the Affordable Care Act's individual responsibility provision. Our blog post inaccarately reports on the two provisions as well. Klein's post sets the record straight.

U.S. Paul Ryan’s so-called “Roadmap to Prosperity,” has been widely blasted as a continuation of Republican lawmakers’ efforts to shred the nation’s already thin safety net for the less fortunate.

Simon Lazarus, public policy counsel for the National Senior Citizens Law Center and author of two ACS Issue Briefs examining the constitutionality of the Affordable Care Act (ACA), digs a bit deeper and finds that the Ryan plan also contains elements essentially identical to the ACA’s individual responsibility provision, which Republican lawmakers loudly attack as a grave threat to liberty. (The individual responsibility provision, as Lazarus notes, is also the center of a slew of lawsuits lodged by far-right politicians. The provision requires certain individuals starting in 2014 to carry health care insurance or pay a tax penalty.)

In a piece for Slate, Lazarus says Rep. Ryan's (pictured) plan includes two individual insurance mandates that are materially indistinguishable from the supposedly toxic ACA individual responsibility provision, which is no more unconstitutional nor an invasion of personal freedom, than they are – nor than Medicare or Social Security is.

Lazarus writes:

One of these Ryan budget proposals—as yet little noticed by pundits or politicians—is almost an exact copy of its equivalent in the Affordable Care Act. It would repeal the current exclusion from employees' income of employer contributions to their health insurance premiums, thus terminating the subsidized employer-sponsored group health regime that covers nearly 60 percent of all Americans. In its place, the Republican plan would substitute a refundable tax credit, to be provided to individuals who purchase health insurance (or to employers who purchase health insurance for their employees). When this new arrangement takes effect in 2022, the tax credit would be set at $2,300 per adult and $1,700 per child, not to exceed $5,700 per family.    

Like this Ryancare tax incentive, the "individual mandate" section of the ACA, which the White House calls the "individual responsibility" provision, constitutes a pay-or-play option. Beginning Jan. 1, 2014, when the ACA provision takes effect, individuals who do not qualify for exemption on hardship or other specified grounds, must either carry health insurance or pay a tax penalty as part of their annual income tax filing. The ACA caps individuals' penalty liability at 2.5 percent of household income above the filing threshold, or a flat dollar amount ranging from $695 to $2,085, depending on family size.

Under both provisions, the result is the same: People who choose to carry health insurance have a lower tax bill than they would if they chose not to. In terms of their respective potential impact on individuals' bank accounts and tax liability, the manner in which they affect individuals' financial incentives, and hence the constraining effect on individuals' financial choices to either buy or forgo health insurance, the two "mandate" provisions are identical. (Indeed, in most cases, the financial difference for the individual taxpayer made by the Republican tax credit would be greater—i.e., more "coercive"—than the ACA tax penalty.)

See the entire article here. For more analysis of the landmark health care law, see Lazarus’s ACS Issue Briefs here and here. For up-to-date information on the legal challenges to the health care reform law, see the ACS website here.

[image via U.S. Embassy Kabul Afghanistan]