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Brooks Wilson's Economics Blog: Health Care: A Misdemeanor for Not Paying Health Care Tax

Saturday, September 26, 2009

Health Care: A Misdemeanor for Not Paying Health Care Tax

In general, economists believe that individuals should control their resources in pursuit of their self interest through markets. Markets sometimes fail because of externalities, the lack of market provision of public goods, market power and asymmetry of information. Based on normative beliefs, some believe that goods such as health care should be provided for all through government financing, another way of saying that the government should require some people to pay for medical bills of others. A health care reform bill before the Joint Committee on Taxation proposes a tax penalty for people who do not buy health insurance and incarceration for those who fail to pay the tax. Carrie Budoff Brown of Politico writes in "Ensign receives handwritten confirmation," that

This doesn't happen often enough.

Sen. John Ensign (R-Nev.) received a handwritten note Thursday from Joint Committee on Taxation Chief of Staff Tom Barthold confirming the penalty for failing to pay the up to $1,900 fee for not buying health insurance.

Violators could be charged with a misdemeanor and could face up to a year in jail or a $25,000 penalty, Barthold wrote on JCT letterhead. He signed it "Sincerely, Thomas A. Barthold."

The note was a follow-up to Ensign's questioning at the markup.

The first link is to a copy of the handwritten, and the second, to an article about Ensign's questioning of the tax, euphemistically called a fee in the note.

This tax would fall heavily on young, healthy tax payers who do not purchase health insurance. Within a market, they are consumers who derive more satisfaction by buying goods other than health care. Under universal coverage, the law considers these consumers free riders.

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  1. Dena Husak, Econ. student27/9/09 5:29 PM

    So, those of us who don't have medical insurance because we simply cannot afford it will be fined $1,900. Failure to pay this will result in a $25,000 fine or a year in jail.

    If a normative statement is defined as (in Mankiw's 'Principles of Macroeconomics') "claims that attempt to prescibe how the world should be", then the statement, "Based on normative beliefs, some believe that goods such as health care should be provided for all through government financing,..." should really say that some believe people should be punished for being poor. Perhaps, the reason some do not have medical insurance is because, after staples and cost of living has been paid for, there simply aren't enough funds for medical insurance.

    Even more rediculous (and immoral) is the fact that being poor is punishable by a fine. And those of us poor, yet otherwise law-abiding citizens, will be put behind bars for our poverty, unless capable of paying for insurance or a $1,900 fee. This doesn't seem like much of a prescription I'd want from my economic expert.

  2. Natasha King27/9/09 8:58 PM

    What has happened to freedom of choice? If I choose not to purchase health insurance this my perogative, right?! Evedently not. I may be the person that leads a healthy life and seldom need to depend on health benefits and if I need medical care may choose to pay out-of-pocket because it is simply cheeper on me in the long run. My economic basis should not have an effect on my healthcare.

    This is not necessarily my case, but if I choose not to purchase insurance it should be MY choice and should not be regulated by any goverment entity. Also, I should not be responsible nor punished for others that do not choose to have health care.

  3. You might not hear this often but sometimes it is hard for a tax payer to even put meals on their tables than to able to buy any necessity. In this economy, a better healthcare reform is a must be solved issue. Tax on citizens that chose to not to buy health insurance is their own personal decision, especially for those who have special circumstances that can't afford healthcare. Healthcare issue is a nonstop debate subject, whether if we have a good healthcare policy yet, it is still a concern and disagreement among healthcare advisors and economists.
    Nam Dinh.

  4. Leslie Elting28/9/09 1:14 PM

    I agree that there should be a penalty for not having health insurance. I think everyone should be required to have it. I work for a medial billing company and there are so many uninsured sick people in the hospital running up bills that they cannot afford to pay.

  5. Jake Dieterich4/10/09 10:38 AM

    Illness is inevitable. Even the poor become ill, would you not think that if they had the funding to be covered in a health insurance plan, they would? It is not right to be charged a fee or even be sentenced time in jail for not being able to afford health care. The lower class already has enough problems alone with just putting food on their tables and a shelter over their head. I agree that everyone should have health care, but why not have a joint system to help them achieve just this? But by no means, is fining them an appropriate "motivator" to aquire health care. If we are doing this, why not fine them for not having a big enough house? Or for not having a high enough paying job?

  6. Evelyn Steffek4/10/09 4:28 PM

    I have to agree with what Natasha King said. Out of anyone in the world the person that would know how likely you are to get ill or hurt it is innevitably yourself. For example if you were a Doctor it would be a good choice to buy yourself health insurance concidering your line of work. And so buying yourself healthcare insurance should be subjective. Perhaps you may not have enough money. I don't think the government should penalize you if you can't pay taxes for something your not buying. However, if you do decide to buy, you have all the resposibility in the world to pay for it. And that includes the taxes!!

  7. Carrie Cooper5/10/09 1:27 PM

    I think that it is wrong that the government would institute this law. As Natasha King said, this law takes away our freedom of choice. It is unconstitutional to punish people who do not choose to own health care. Many young people do not have the need for health insurance, and they should not be taxed for refusing to buy it. If someone does not own a car because they live in a city and rely on public transportation, they should not be penalized for refusing to buy car insurance. It is the same principal for health insurance.