This week California Governor Gavin Newsom is taking a statewide tour to promote his plans to expand Obamacare, including coverage to undocumented adults.
To pay for the expansion, Gov. Newsom wants to reinstate the individual mandate penalty – penalizing Californians who don’t buy insurance they cannot afford. This is the wrong approach.
When the Affordable Care Act’s individual mandate penalty first went into effect under Pres. Barack Obama, the penalty was 1% of income or a maximum of $285 per family ($95 per adult and $47.50 per child).
The Newsom healthcare penalty will be $695 per adult per year or 2.5% of annual household income. But that’s just part of the story on who will pay the penalty.
According to the Public Policy Institute of California, the majority of penalties were assessed against taxpayers earning less than $50k annually: “Taxpayers with incomes below $25,000 accounted for about 45% of returns subject to the penalty, while those with incomes between $25,000 and $50,000 accounted for another 37%.”
So Gov. Newsom’s effort to expand Obamacare will come at a cost to lower-income taxpayers, pressed by increasing costs for housing, fuel, and other aspects of daily life, and it will be at the expense of communities who can least afford to pay for another government program.
Adding insult to injury, Gov. Newsom plans to use the penalties assessed on low-income Californians to subsidize healthcare coverage for individuals and families making $100,000 or more. This “Reverse Robin Hood” – taking money from lower-income earners to give to higher-income earners – is just plain wrong.
Because here’s another truth about the individual mandate – most California residents the governor seeks to punish likely don’t have the $695 to pay the penalty. A survey published by Yahoo Finance showed that nearly 60% of Americans have less than $1,000 in savings on hand. Of that figure, 26% – or one in four Americans – have ZERO savings.
It’s likely that those Californians with $1,000 or less in savings are earning $50,000 or less a year. Then consider that if those people can’t pay the penalty, by the time the State of California calculates interest and penalties that $695 could turn into thousands owed the state.
With gas prices nearing $5 a gallon, increasing energy and water rates, rising rents, and increased homelessness, Democrats need to make California more affordable, including healthcare, not more expensive. Instead of penalizing taxpayers who cannot afford to buy healthcare, Gov. Newsom should focus his efforts on reducing costs and expanding choices so that hardworking Californians can afford to buy the healthcare they want and need. Gov. Newsom’s penalty is a bandage to the failure to fix healthcare.
California State Senator Jeff Stone is a pharmacist and has taught pharmacology to graduate nurse practitioner students seeking their masters at Cal State Dominguez Hills. He has also served as an externship professor for the USC School of Pharmacy. Senator Stone was elected to represent the 28th State Senate District in 2014. The 28th District stretches from Southwest Riverside County (Temecula, Murrieta and Lake Elsinore) all the way to the Arizona Border.