Health Care Reform Penalties

October/08/2009 19:04PM
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All the bills being considered by the House and the Senate have some sort of penalty for not having health care insurance.

Quotes from an analysis of the bills by the RNC.

“In the bills in the House of Representatives, a person who failed to get coverage would face a penalty of 2.5 percent of their modified adjusted gross income up to the cost of basic health insurance, as defined by the new national health insurance exchange. The House grants exemptions for dependents, religious objections and financial hardship.

In the Senate, the Health, Education, Labor and Pension Committee caps the penalty at $750. It exempts residents of states that don’t establish health insurance exchanges, those for whom affordable coverage is not available, and those without coverage for fewer than 90 days.

The Senate Finance Committee specifies a tax penalty of $950 for an individual and a maximum penalty of $1,900 per family. The penalties are a little lower if the person’s income is below 300 percent of the poverty level. People are exempt from the mandate if they live below the poverty level, if the lowest cost insurance exceeds 10 percent of their income, or if there is financial hardship or religious objections.

We should note that the bills tend to leave the definitions of financial hardship up to other officials, such as the secretary of Health and Human Services.

We’re going to duck, for now, the question asked by Stephanopolous, about whether Obama is breaking his promise on raising taxes. If health reform passes, then we’ll evaluate the mandate with respect to our Obameter campaign promises database. Promise No. 515, “No family making less than $250,000 will see ‘any form of tax increase,'” is currently rated at risk.”

So, which penalty will become law? The State of Massachusetts has a penalty of $900 if you refuse to get insurance. How does is work there?

Their reform, like those being proposed in congress, require coverage for pre-existing conditions. Young and healthy people pay the penalty and buy insurance when they get hurt or sick. Poor get exempted from the penalty. Since the penalty is so much cheaper than actually getting insurance, even at the lower rates in the state, people just job the system.

No wonder the State of Massachusetts is in budget trouble since the costs are far exceeding the amount budgeted. Premiums are held artificially low. Costs are skyrocketing since people are jobbing the system, using more health care, and the expense pool is not consistent with actual costs.

The whole health care reform economics budget is based on young people paying over $2,000 a year for insurance. If they opt out and pay the penalty the budget is shot. It doesn’t work that way in Massachusetts.

Why will it work differently across the country?

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