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Tax makes health care law OK

By Kay Bell · Bankrate.com
Thursday, June 28, 2012
Posted: 11 am ET

The Patient Protection and Affordable Care Act, aka "Obamacare," is constitutional. So sayeth the U.S. Supreme Court.

But how the nation's highest court came to that decision is intriguing. Taxes make it OK.

When the lawyers stood before the Supreme Court, the key argument was that the individual mandate which will, in two years, require virtually everyone to buy medical coverage is unconstitutional under the Commerce Clause.

The Commerce Clause gives Congress broad power in regulating interstate commerce. The court found that the health care act did indeed violate the commerce clause. Congress can regulate how people interact with commerce, but they can't make them (us) interact.

But Chief Justice John Roberts, writing for the 5-to-4 majority, said that the mandate is constitutional because of Congress' power to tax citizens.

The mandate will be enforced by a tax penalty. If you don't buy insurance when the provision takes effect in 2014, you'll owe taxes for not doing so.

So what's next?

Already the ruling has led to metaphorical head explosions among folks who hate both the health care law and taxes.

Politicians are recalibrating or retrenching their positions.

Most of us, however, will do what we've been doing. We'll wait for the bulk of the health care provisions to kick in in a couple of years.

The individual mandate tax that makes the full act OK is just one of many tax provisions in the health care act. You can check them out in my earlier, part one and part two, looks at those taxes.

Some folks will no doubt decide that it's cheaper to pay the tax than buy an insurance policy. That's their lawful choice, now that the mandate is staying on the books.

Are you glad or mad that the health care act received a stamp of approval from the Supreme Court? What do you think, or want, Congress to do next regarding health care?

Keep track of the health care and other tax debates, as well as get tips on ways to reduce all your tax bills, by subscribing to Bankrate's free Weekly Tax Tip newsletter.

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