There’s been some debate lately about whether the proposed penalties for going without health insurance amount to a tax or not. Since Obama promised to not raise taxes on families earning less than $250k, some are saying that he’s going back on his word if a monetary penalty for avoiding health insurance becomes law. And they’re throwing out the fact that the IRS would be responsible for collecting the fine as proof that it is indeed a tax. But from a practical standpoint, what other organization has as much access to our money and financial records as the IRS? Do we really want to create a whole new government entity in order to enforce a health insurance mandate? Doesn’t it seem more fiscally responsible to delegate the task to an already well-established organization that works specifically with collecting money from the public? I can’t think of a more efficient way of collecting the fines.
Most people who don’t have health insurance aren’t uninsured by choice, and don’t need the threat of a fine to motivate them to try to get coverage. Usually they can’t afford the premiums or can’t qualify for health insurance because of pre-existing conditions. For the former, all of the health care reform proposals I’ve seen include subsidies to help pay the premiums. For the latter, the idea of doing away with medical underwriting on individual policies has widespread support among lawmakers. The fines are to motivate the people who can afford health insurance but would otherwise choose to go without (potentially transferring the cost of a significant emergency room bill onto the rest of the population that does pay for health insurance).
If we create a law that says that everyone has to have health insurance, we have to have some way of enforcing it. The speed limit on I25 is 75 miles an hour. If I choose to drive 85, I can expect to be pulled over and ticketed. I don’t think of that ticket as a tax (although I know that the money helps to fund the state budget, just as our taxes do). Rather, it’s a monetary penalty charged for breaking the law – a common practice in our justice system. I could have avoided it if I had obeyed the speed limit. I suppose we could go with 40 lashes instead, but I doubt that would be well received.