'This Week' Transcript: Vicki Kennedy, Jack Lew and Paul Ryan

OBAMA: ... is absolutely not a tax increase.

(UNKNOWN): Now we know that's not true. Obama's health care law is actually one of the largest tax increases in history. How can we afford this tax? We're already struggling.

(END VIDEO CLIP)

STEPHANOPOULOS: As you know, President Obama denied all along that this was a tax. Is he now prepared to defend it?

LEW: George, I think we have to take a step back. What is in the law is a penalty. It starts by saying all Americans have a right to health insurance. For Americans who buy health insurance or who can't afford it and get it through a government program, there is no penalty. It covers 99 percent...

STEPHANOPOULOS: You keep wanting to use the word penalty.

LEW: It covers 99 percent of the American people. In Massachusetts, where they had a plan like this under Governor Romney, 1 percent did not take insurance and they paid the penalty.

Let's be clear about who that 1 percent is. Those are people who can afford health insurance who choose not to buy it, and then when they get sick, they go to the hospital and the costs get spread amongst all the people paying for insurance. So the law set it up as a penalty for people who make that choice.

The court found it constitutional. Frankly, what you call it is not the issue. It's what it is.

STEPHANOPOULOS: But they said they found it constitutional because it is a tax, not a penalty. Here is the chief justice. Right here, he said, "The shared responsibility payment may for constitutional purposes be considered a tax, not a penalty."

LEW: The Supreme Court looked at what the structure of the law was, and they saw that 1 percent of the people would be paying this charge if they chose not to avail themselves of health insurance. But more middle-class people are going to get a tax cut in this law. There's a tax cut of $4,000 for people who need help paying for health insurance.

For the very, very few who choose to go uninsured, and who can afford it, and who are saying that if I need health care, it's going to be someone else's burden, it says they have to pay a charge.

You know, if you look at the past, since President Obama's been in office, middle-class families have gotten a $3,600 tax cut. In this law, there's a $4,000 tax cut for people who need help paying for health insurance. For that 1 percent who have chosen not to buy health insurance and just to pass the burden onto others, there's this penalty.

STEPHANOPOULOS: But you do concede -- and you keep wanting to use the word penalty -- you do concede that the law survived only because Justice Roberts found this to be a tax?

LEW: You know, I think, if you look at the decision, which is a very complicated one, you know, there are arguments that support different theories. There was...

(CROSSTALK)

STEPHANOPOULOS: But the argument of Chief Justice Roberts is that it's a tax.

LEW: He -- he went through the different powers that Congress has and he found that there is a power, whatever you call it, to assess a penalty like this.

STEPHANOPOULOS: He called it a tax. So you're conceding that?

LEW: I'm saying that it was set up as a penalty for people who choose not to buy insurance, even though they can afford it, and for that 1 percent, we call it fair.

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