Tax Or Penalty? Individual Mandate Haunts Romney
Updated 4:15 p.m. on July 4
The Massachusetts health care law, Mitt Romney鈥檚 signature achievement as governor, is adding more pressure to the expected GOP presidential nominee’s campaign. Romney鈥檚 support for the requirement that all residents have health insurance, known as the individual mandate, is at the heart of his predicament. The issue is whether the call the mandate a tax or a penalty.
In an interview broadcast today, Romney announced that he considers the mandate a tax.
鈥淭he majority of the court said it’s a tax and therefore it is a tax. They have spoken. There’s no way around that,” Romney told CBS reporter Jan Crawford. “You can try and say you wish they had decided a different way but they didn’t. They concluded it was a tax.”
That marked a turnaround for the campaign. Romney鈥檚 longtime adviser, Eric Fehrnstrom, dropped a bombshell Monday when he said the governor does not believe the individual mandate is a tax.
鈥淭he governor has consistently described the mandate in Massachusetts as a penalty,鈥 Fehrnstrom told MSNBC鈥檚 Chuck Todd.
The point is important for Romney, because if he calls the fine for failure to have health insurance a tax, then he cannot continue to maintain that he never raised taxes in Massachusetts. So Fehrnstrom as Todd asked him to clarify.
鈥淭he governor does not believe the mandate is a tax, that鈥檚 what you鈥檙e saying,鈥 Todd asked.
鈥淭he governor believes that what we put in place in Massachusetts was a penalty,鈥 said Fehrnstrom, 鈥渁nd he disagrees with the court鈥檚 ruling that the mandate was a tax.鈥 So he agrees with the president,鈥 said Todd as he and Fehrnstrom went back and forth.
And that stance appears to have confounded other Republicans. 鈥淭his is very surprising, I would say even shocking, that he would do this to allies who wanted to make Obamacare a huge issue against Obama,鈥 said Repubican Strategist Todd Domke, after the Fehrnstrom interview.
Romney鈥檚 record on the individual mandate in Massachusetts is also confusing. His said that any Massachusetts resident who did not either have health insurance or post a $10,000 bond as proof they could afford care could lose the personal exemption on their tax returns. In other words, Romney would have imposed a penalty through the state tax form.
Few people in Massachusetts were asking if the fine for not having health insurance was a tax or a penalty before the Supreme Court ruling last week.
鈥淭he distinction hasn鈥檛 mattered at all, it hasn鈥檛 entered the political debate or made any difference in terms of policy,鈥 said Michael Widmer, president of the Massachusetts Taxpayers Foundation. The issue of tax versus penalty just never came up, said Harvard School of Public Health professor John McDonough, because both 鈥淒emocrats and Republicans agreed that an individual coverage requirement was a smart thing to do. It didn鈥檛 become controversial because no one was throwing rocks at each other.鈥
But there鈥檚 still the question: is the individual mandate a penalty or a tax in Massachusetts?
鈥淲ell it鈥檚 a penalty, but frankly I don鈥檛 care what you call it, it鈥檚 a solution,鈥 said Gov. Deval Patrick. 鈥淚t affects a very small number of people who are freeloaders on the system where we pick up their costs.鈥
For Romney, right now, whether the individual mandate is a tax or a penalty does matter and may, as some Republican leaders suggest, determine his chance to beat Obama on health care.
This story is part of a reporting partnership that includes , and Kaiser Health News.