"It profits me but little that a vigilant authority always protects the tranquillity of my pleasures and constantly averts all dangers from my path, without my care or concern, if this same authority is the absolute master of my liberty and my life."

--Alexis de Tocqueville, Democracy in America

Thursday, June 28, 2012

Obamacare's Big Lie

In reading the Obamacare decision, one thing jumped out at me -- just how minimal the penalties are for not buying health insurance.   If it's a tax, it's not that much of one:

Beginning in 2014, those who do not comply with themandate must make a "[s]hared responsibility payment" to the Federal Government. §5000A(b)(1). That payment,which the Act describes as a "penalty," is calculated as a percentage of household income, subject to a floor based on a specified dollar amount and a ceiling based on the average annual premium the individual would have to pay for qualifying private health insurance. §5000A(c). In 2016, for example, the penalty will be 2.5 percent of an individual’s household income, but no less than $695 and no more than the average yearly premium for insurance that covers 60 percent of the cost of 10 specified services (e.g., prescription drugs and hospitalization). Ibid.; 42 U. S. C. §18022. The Act provides that the penalty will be paid tothe Internal Revenue Service with an individual’s taxes, and "shall be assessed and collected in the same manner" as tax penalties, such as the penalty for claiming too large an income tax refund. 26 U. S. C. §5000A(g)(1). The Act, however, bars the IRS from using several of its normal enforcement tools, such as criminal prosecutions and levies. §5000A(g)(2). And some individuals who are subject to the mandate are nonetheless exempt from the penalty—for example, those with income below a certainthreshold and members of Indian tribes. §5000A(e).

So, if you make $50,000, you'd pay a maximum of $1,250 in tax penalties if you decided not to buy health insurance.   If you are a young person making $20,000 a year or so, you'd pay a minimum of $695/yr.

THERE IS NO WAY THAT IS ENOUGH TO FORCE SOMEONE OTHERWISE DISINCLINED TO BUY HEALTH INSURANCE TO BUY HEALTH INSURANCE.  If I were young and healthy, I'd probably keep my money and pay the penalty, hoping I don't get sick, but knowing that, if I did, I could always get insurance because of the "must issue" requirements of Obamacare.   (Or I'd not pay... are there really going to be IRS agents to arrest non-compliers?   We can't police our borders, are we going to police Starbucks to arrest young health insurance scofflaws?)

So, Obamacare's Big Lie is not that the individual mandate was not a tax.   The Big Lie is that the individual mandate will force people to buy insurance, which will then offset the costs of the "must issue" provisions whereby insurers are required to offer insurance to people with pre-existing conditions.   It won't, which means that insurers will go out of business, and the government will take over.   It's inevitable economics.

No comments:

Post a Comment