Obamacare

Four Million New Fines For Declining to Purchase Insurance

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Mo' mandates, mo' problems?

Since taking office, President Obama hasn't missed an opportunity to remind voters of how many individuals his health care reform law is projected to cover. But he's talked a lot less about how many people the law would fine for choosing not to purchase insurance. Earlier today, the Congressional Budget Office put out an estimate. The office's guess is that, in 2016, two years after the mandate kicks in, about 4 million individuals will face fines for going without health insurance. Here's the gist:

Among those who are subject to the penalty, many will voluntarily report on their tax returns that they are uninsured and pay the amount owed. However, other individuals will try to avoid making payments. Therefore, the estimates presented here account for likely compliance rates, as well as the ability of the Internal Revenue Service (IRS) to administer and collect the penalty. In total, about 4 million people are projected to pay a penalty because they will be uninsured in 2016 (a figure that includes uninsured dependents who have the penalty paid on their behalf). CBO and JCT estimate that total collections from those penalties will be about $4 billion per year over the 2017–2019 period.

Obama's frequent promise that "if you like your health care plan, you will be able to keep your health care plan" has always been a whopper. It's also been a convenient way to avoid talking about all the individuals who either do opt out of coverage or would like to. What the CBO is saying with this letter is that, each year, millions of people can be expected to opt out, and they'll be required to pay billions in penalties as a result. Expanding choice this is not.

The CBO letter says nothing about the collection process, but given that there's a dollar figure attached to the revenue projections, I suppose we can presume this is the number of people who are expected to actually pay. But with the IRS seeming to lack any significant ability to enforce the mandate, it's not clear how the provision's penalties will actually work in practice.  Some people will likely pay the fine because it's a better deal. Others will likely game the system—hopping on and off of insurance plans in order to get coverage for big expenses without paying in long term. And if that's the case, we could find ourselves in an insurance death spiral, with a shrinking insurance pool and premium prices rising faster than ever. All of which is to say that no matter how the mandate works, or doesn't, the possible outcomes don't look good. 

I wrote about the madness of the mandate here and noted a constitutional case against the provision here

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  1. the possible outcomes don’t look good

    By design, perhaps? Its failure will surely usher in some variant of European-style National Health Care.

    1. We have a winner. It will be justified as a reason to completely nationalize health care. This POS known as ObamaCare is but step 1.

  2. I’ve been having fun asking liberals to solve this conundrum in regards to new laws erasing pre-existing exclusions for Insurance policies:

    If insurance companies have to take me regardless of my pre-existing condition, why would I buy health insurance? Why don’t I just pay the fine and wait until I get sick? Technically I could show up to the counter at Aetna with AIDS, opena a new policy, pay my $200 a month premium and they would be forced to provide me with millions of dollars in healthcare, right?

    The answers I’ve received are hilarious.

    1. And you DON’T carry some sort of audio recordinational device which you upload the contents of to youtube because…?!

      1. Hmm…point taken. I should start doing this.

        1. Just put teasers on youtube though. Gotta charge for the full-length recordings.

  3. Count me in on the “paying the fine” side. Didn’t think of that gaming the system option, though–I’ll be all over that bandwagon if I ever want it.

    1. Paying the fine is voluntary. The IRS can’t enforce it. So it is a tax on the uninformed or the easily scared.

      1. The IRS can’t “enforce” it, instead they will withhold additional taxes to cover the fine you don’t pay.

        How that differs from “enforcement” is a matter of semantics.

        1. It’s just a box you check on your tax form!

  4. Fuck you, Obama. I won’t pay.

  5. I plan to game the system as a form of civil disobedience. make them see the necessarily perverse consequences of what they’ve done.

    Everyone should join me.

    1. Planning on it, somehow. XD

  6. Come ON, you fucking ingrates! We are required to buy car insurance! Pay up, you chiselers!

  7. One argument no liberal I’ve talked to in person can answer:

    Should everyone be forced to buy an auto policy, even if they *can’t* drive?

  8. I advise each of those 4 million to buy guns and ammo instead of paying the fine.

    Let’s see those fuckers collect.

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