Obamacare News, Numbers, Penalty: 87% Uninsured Can Claim Hardship Exemption to Avoid Mandate Tax, CBO Finds
According to an analysis done by the Congressional Budget Office (CBO), almost no one among those uninsured will end up having to pay the mandate penalty written into Obamacare. The CBO also found that 87 percent could claim an exemption -- a rate higher than previous estimates. These statistics do not only create a large gap in the law's budget forecast but it greatly increases the chance of sending the program into a loss spiral as well. This phenomenon takes place in the insurance industry when too many people realize that they can exempt themselves from the imposed penalty for reasons such as being young or healthy enough to not actually claim insurance.
Estimates suggest that only 4 million taxpayers will end up paying tax penalties out of the 30 million people who might still be uninsured by 2016 -- far greater than the CBO's estimate two years ago that 6 million would pay the penalty. This is despite the law requiring everyone to buy insurance, which has been approved by the government. According to the CBO's findings, the main cause of the decline in the payment rate is the constant ad hoc changes in the rules made by the administration since 2012. Nonetheless, a shortage of around $27 billion less than the original estimates will be suffered over the next decade -- assuming that more people will not avoid paying the penalties.
Dodging the penalty has not been difficult due to the ease of claiming a hardship exemption. Moreover, strict limits are placed on the IRS' capacity to collect money. Grounds for exemption are incredibly broad, making it easy for almost anyone to undermine the regulations. Apparently, it can be as easy as saying that one has suffered domestic violence without having the need to provide documentation. In its latest report, the CBO explained how it could no longer determine the numbers and the implications of Obamacare's impact on the budget.
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