Off to the Big House: Penalizing Non-Buyers of Health Insurance
“Democrats health bills depend on forcing individuals to buy insurance or face severe fines or imprisonment.”
George Will, Nov, 19, 2009
Before we spin off into a Thanksgiving reprise of last summer’s death panel lunacy, let’s be clear. Nothing in Will’s statement is true.
This is what is true: Both the House health bill and the measure now being debated in the Senate include a “play or pay” fee on those who don’t buy insurance. Some call it a tax, but whichever word you prefer, if you don’t get coverage, you pay. But “severe fines,” as Will claims? Hardly. Under the Senate bill, someone who refuses to buy would pay an initial annual penalty of $95. Will probably spends more than that for one of his bow ties.
And imprisonment? Give me a break. There is no such penalty in either bill. The argument, as I understand it, is that those who don’t buy insurance and refuse to pay the fine could be charged with criminal violation of the tax laws and, if convicted, could be sentenced to prison. Some of the tax cheats recently caught up in the UBS scandal got a few months for failing to pay millions of dollars in back taxes, but I have never heard of anyone being sent up the river for failing to pay $95 in taxes. More likely, the IRS would garnish their wages for the 95 bucks. Not exactly hard time in the big house.
In truth, the problem is not that the penalty is too harsh. It is that it is much too weak. Here’s why: Serious health insurance reform is built on four pillars: insurance companies must not deny coverage or boost premiums because someone is sick, everyone (even the young and healthy) must have insurance, a mechanism must exist for people to buy in the individual insurance market at reasonable prices, and the government must provide subsidies to make insurance affordable for the working poor.
Unless coverage is both guaranteed and mandated, reform falls apart. Government should not require people to buy insurance while allowing carriers to pick and choose their customers. But neither should it require insurers to sell to all comers, but allow the healthiest to opt out. If only the sick buy, insurers must raise rates or go bust. And the higher they raise rates, the more likely only the sickest will purchase. In the insurance biz, they call this the death spiral.
The fine for non-buyers eventually rises to $750 in the Senate bill. The House penalty is much stiffer for many– 2.5 percent of income. If insurance reform is going to work, it needs to combine the carrot of both subsides and (hoped-for) market-driven lower prices with the stick of non-buyer penalties. While they don’t say so publicly, this low tax on going bare is a big reason why insurance companies now oppose the health bills.
Will not only has his facts wrong, but his ideas would doom insurance reform to failure. But that, I suppose, is the idea.
I'm kinda' sick and tired of this subject: health insurance. I don't know where to begin explaining just how many changes I've seen happening in the company I work for. I wonder, how much time will it take until our leaders will decide upon an universal health care plan…
______________
Mathew Farney | Web Hosting
The easier answer is simply to have an employer payroll tax with offsetting credits if insurance is provided. If employers offer a more generous, plan than the credit or even the tax, they can and if they don't, the taxes raised would pay for a “public option.” There should also be a public option for those who attempt to buy or are dropped from private insurance, with a fine on the insurance company who does the denying or dropping (who should pay 80% of the public option premium).
Car insurance or a surety bond is required as a condition of operating your own car. The proposals would require the purchase of health insurance as a condition of existing.
Do you see the difference? The former is a transaction tax; the latter is a head tax.
That would be a fair point, except that, at least in most states, you are only legally required to carry liability insurance, which pays for damages and injuries to the other party resulting from an accident caused by you. You are NOT required to carry insurance that will pay for damages to your vehicle, or injuries to you resulting from an accident you caused. If you take a loan to buy a car, then the bank requires you to carry full coverage, but that's the bank saying, “I won't give you money unless you carry this insurance.” As it's the bank's money, it has every right to deny you the loan. In the case of health insurance, it's the government saying, “You will pay a fine unless you carry health insurance,” which is not the same thing.
Try driving without car insurance, and see how far your constitutional principles get you.
Will's imprisonment claim is hyperbolic. By the same logic, we all face imprisonment when our parking meter expires.
What is new in this legislation is the idea that the federal government can fine you not for something bad you have done, but for something good that you have not done. A government which can do this is not the government of limited powers intended by the framers of the Constitution.
Mandating purchase of insurance may be a good idea, and it certainly appears to be necessary to make the current proposal work, but the price is too high: a precedent that the government can force you to do anything it wants you to do. Some day that precedent will be applied in a way that progressives will hate. By then it will be too late to fight against this expansion of control over our private lives.
Speaking of which, what ever happened to the Right to Privacy in this debate? Isn't one's medical information a private matter? Can a person really be forced to reveal his medical history to an insurance company or pay a fine to the government? And does the amount of the fine really make a difference in your answer?
Will's statement: “Democrats health bills depend on forcing individuals to buy insurance or face severe fines or imprisonment.”
Your statement: “Nothing in Will’s statement is true.”
Not so fast. Let's look at the first part of Will's statement: “Democrats health bills depend on forcing individuals to buy insurance…”
Umm. This is true. You make the case pretty strongly for the need of a robust mandate to bring people into the system.
So at this point, it looks like Will's statement is at least 50 percent right, and yours is wrong on its face, since you say “nothing” in his statement is correct. At least half is, so it meets the standard of something, as opposed to “nothing,” being right.
The rest of the statement is certainly more debatable, but hinges of what you or will consider steep. You should also be a bit more honest in your critique. The $95 is the minimum fine in year 2014, that scales up to a minimum $750 in 2019. $750 is steep to most people. Moreover, there is no income hardship exemption, so this could fall on people with quite modest incomes.
Lastly, if the tax code includes potential jail time for non-payment of taxes, failure to pay those taxes does confront non-payers with potential jail time. They are facing jail time, irrespective of whether or not they are senteced to it. Tricky wording, perhaps, but Howard, if you're going to parse a statement, at least don't play dumb. Further, suggesting that the sentencing in the UBS case would necessarily hold true for other violations is absurb. If it's in the applicable statute, and the judge feels it's appropriate, non-payers go to jail.
I conclude with the following:”Nothing in Gleckman’s statement is true.”
Why is it that people think George Will is intellectually honest? Is it because he is so meticulous in his dress and manner? He is, of course, dishonest on health reform, and even more so on climate change.
The problem I have is not that the fine is too lenient or too harsh. My problem is that there is a fine at all. How is it in any way constitutional to impose a fine of any amount on an individual who refuses to buy a good or service? As an economist, I understand the argument that “people who do not buy insurance drive up costs for everyone else, so they must pay some share of that.” However, while this may hold some water economically, it is extremely thin at best when deciding constitutionality. Using this logic, the Federal Government could force individuals to buy virtually any good or service, or else pay a fine. Given that not including fines would “doom insurance reform to failure,” I would argue that the bills currently under debate are bad policy.