ACA loophole blows budget forecast; increases odds of insurance "death spiral"

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INVESTOR'S BUSINESS DAILY

87% Of Uninsured Can Avoid ObamaCare Mandate Tax: CBO
By JOHN MERLINE
06/05/2014

Almost none of the uninsured will end up paying the ObamaCare mandate penalty, according to an updated analysis by the Congressional Budget Office, which found that 87% will be able to claim an exemption.

That exemption rate is higher than the CBO had previously thought, which not only blows a hole in its budget forecast for the law, but also increases the odds of an insurance industry "death spiral."

According to the CBO's latest estimate, out of the 30 million people who will still be uninsured in 2016, just 4 million will end up paying any tax penalty, despite the law's requirement that everyone buy government-approved insurance. Two years ago, the CBO figured 6 million would pay the penalty.

Half of the 4 million now expected to pay the penalty will have incomes below $35,000, the CBO found.

The CBO says ad hoc changes made by the administration and rules written since 2012 are the main causes of the drop in the payment rate. For example, President Obama extended the "hardship exemption" to include anyone who had their previous insurance canceled because of ObamaCare.

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