It's too bad it's been left to Cato's Michael Tanner to point out that individual mandates aren't working very well in Massachusetts. Lots of people aren't following the mandate to buy insurance, and there's no real enforcement mechanism in place. That doesn't mean we should all become libertarians, but it does mean that if we want to create a government program that gives health insurance to everyone who doesn't have health insurance right now, what we need is give them all health insurance. This mandate idea looks okay if you get to assume the policy equivalent of a frictionless plane but the enforcement issue is a huge real-world problem that's being introduced for the not-very-good reason of wanting to put a "centrist" facade on the policy.
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Sign 'em Up
14 Nov 2007 08:23 am
Comments (18)
tyro: duh.
I always pay extra at the end of the year for the state income tax. It is deducted on wages but not on interest.
Basically, state should "garnish" obligatory insurance in some manner, and provide it. "Providing" is not all that complicated -- private companies do administration of medical plans for self-insuring employers, and this would be roughly the same. Mercenary bureaucrats, so to speak.
Collecting the money -- this is a different story. One would have to stop beating around the bushes and collect it as a tax. At which point one would have to explain why the tax is flat/regressive, i.e. not dependent on income. Probably it should not be, but someone has to open this can of worms to arrive at a solution rather than a pseudosolution.
And without forcing people into state-run plan this plan will be too expensive.
Well... that is just plain retarded. Do the economic elite really think Americans just don't want health insurance, but that they could pay for it if they did? That's the only way such a plan would make sense, and it could only be reached by a purposeful misreading of the situation.
It's not an enforcement issue, Matt.
Ever heard the phrase "you can't get blood out of a turnip"?
Tanner's blurb is fucking stupid. First, the deadline isn't even until tomorrow, 11/15, and Massachusetts is purportedly seeing an 80% sign up rate. Is that really so bad? My guess is that number trends toward 90% in a few weeks when all the last minute sign-ups from procrastinators (like me) are processed. Secondly, the plan pretty obviously intentionally goes easy on people in the first year -- assessing only a $200 tax penalty on refuseniks. In reality the plan is designed to get Massachusetts to full coverage several years down the road, as the penalties gradually increase in severity. Pay or play plans may not be ideal, but, in an America where cries of "socialized medicine" can cause people to faint in the streets, they can be a functional first step on the road to UHC.
This realy says that you should not have a Republican (Multiple Choice) come up with a plan for something they really do not support in the first place.
Wouldn't it still be cheaper to pay the fines, then pay for the insurance?
The penalty/reward system in MA simply doesn't make a lot of sense from a practical perspective. Say you're a 20-something contractor making $35k a year. You're looking at, what, a $1000 state tax return at the end of the year? At best.
The penalty for not getting insurance? $200 in tax return dollars.
Even the minimum insurance plan in MA costs at least $180/month. That is $2160/year. If the main reason you don't have health insurance is because it costs too much, is the $200 tax return hit going to make you change your mind? Especially when you need to pay over $2000 just to earn that extra $200?
Ezra Klein says it better than me, but an 80% signup rate-- so far-- for something that only carries a $200 annual penalty sounds pretty successful to me.
I've always thought it was a huge mistake when the conversation changed from how to provide health care to how to provide health care insurance.
Mandates in health insurance have always seemed to me to be a Trojan Horse, a bad-faith pseudo-mechanism for wonks to debate over. Auto insurance, for example, can rationally be mandated because driving is a privilege, and a certain significant number of people also don't have automobiles. Everybody, however, has a body in need of periodic maintenance and the cover of a big risk pool. The logic of universal health care requires that the citizenry be universally covered. Legions of healthy young bohemian types or self-employed entrepreneurs might very frequently whistle past the graveyard and do without health insurance for many years. But universal health care means (oh, yeah--here it comes, the big, bad Welfare State Mothra!) that everybody helps pay so that everybody (including the occasional unlucky strapping youth who contracts a zillion-dollar life-threatening illness) gets covered.
The penalty/reward system in MA simply doesn't make a lot of sense from a practical perspective. Say you're a 20-something contractor making $35k a year. You're looking at, what, a $1000 state tax return at the end of the year? At best.The penalty for not getting insurance? $200 in tax return dollars.
This year, yes. Again, the plan was pretty obviously designed to not be overly draconian in its first year. Penalties increase drastically in the future.
We were forced to buy our daughter a policy when she arrived in Mass. for college, since we didn't already have health coverage in the US. Otherwise we would have just paid for her to use the clinic at school and crossed that bridge when we came to it. I feel sorta mad that we had to buy a policy, when we don't need to pay for such a thing here in the UK.
Jasper is absolutely right. The system is working pretty much as intended. Pay-or-play may not be ideal, but it's better than a pay-roll tax that won't pass.
Matt should know better than to take Tanner at face value.
Otherwise we would have just paid for her to use the clinic at school and crossed that bridge when we came to it.
Kathy F: "Crossing that bridge" when you come to it can be astronomically expensive in the US. Boston has some very fine hospitals; if she were my daughter I'd want to make sure she's robustly insured and able to avail herself of first class medical facilities should something serious happen, and she's unable to fly home for treatment. (I'm assuming the NHS doesn't adequately cover Britons overseas, as you indicate you "didn't already have" insurance in the US for your daughter). Anyway, there's really not all that much difference between having the government require you to pay taxes that go to pay for healthcare, and requiring you to pay insurance premiums that go to pay for healthcare. (I'd prefer the former, mind you, I'm just saying there's really not all that much difference to your wallet).
By the way, if anybody's interested, here's a link to the Boston Business Journal Tanner cites:
If you sift through the facts and figures, it would appear that about 60% -- not 80% -- of uninsured Bay Staters have acquired health insurance coverage since the law took effect. That's still pretty good, in my book, as it pushes the state's insured rate to nearly 96%. And that's with the measly $200 penalty. Said penalty will, in a few years' time, equal 50% of the annual premium for a health insurance plan.
A standard result in economics is that taxes have what's known as an "excess burden," meaning that taxpayers lose more than a dollar for every dollar that the government gets. The only exception to this is a lump-sum tax (also known as a head tax) that everyone has to pay no matter what. The problem with lump-sum taxes is that they are regressive.
Financing health care through general revenues means bearing the excess burden of taxation, whereas a universal mandate is essentially a lump-sum tax, and so has no excess burden. The person who likes mandates the most should be the one who thinks that we should have more lump-sum taxes in general, and who also believes that there is no politically feasible way to levy them unless the tax is specifically tied so something that people care about like heath care.
http://thephoenix.com/article_ektid50398.aspx
The price you pay
“Individuals who cannot show proof of health-insurance coverage by Dec. 31, 2007, will lose their personal-income-tax exemption when filing their 2007 income taxes,” reads the stern-sounding diktat on Mass.gov. Effectively, that’s a $219 fine.
Which is not chump change, of course, but compared, say, with the $3000 settlements extracted by the RIAA from people caught sharing music files online, it’s a bargain. So it’s not hard to believe that Massachusetts citizens with a libertarian bent might be willing to pay it rather than get the required insurance, just to make a point about governmental intrusion.
But that ain’t all. “Failure to meet the requirement in 2008 will result in a fine for each month [emphasis added] the individual does not have coverage. The fine will equal 50 percent of the least-costly, available insurance premium that meets the standard for creditable coverage.” As the saying goes: it adds up.
http://thephoenix.com/Article.aspx?id=50400&page=2
But even at Kia prices, are the state’s young adults signing up for the low-budget insurance? It’s hard to say, because so far, with the data spread among many points, nobody yet knows for certain who is and who isn’t participating, and why. Officials estimate that 200,000 previously uninsured people have bought health insurance in Massachusetts in the past 16 months. That leaves somewhere between 150,000 and 300,000 still to sign up, depending on whose estimates you believe.
Some theorize that the ones who have signed up are lower-income families taking advantage of new subsidies and low-cost options — meaning that the remaining uninsured might be the higher-income young adults who may prove far more difficult to convince.
To prompt remaining laggards into action, the state will begin imposing penalties, through the state tax system, beginning January 1. That fine will start at a couple hundred dollars for 2007, but for 2008 will likely be equal to half of the cost of the cheapest available insurance plan — as much as $1500.
Some, including McDonough of Health Care For All, argue that the penalty should be lower during this start-up phase. McDonough says that a lower fine is under consideration. “We’ve been urging the Patrick administration to view 2008 as a phase-in year,” he says.
Comments closed November 28, 2007.
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Heads in the Sand
Didn't California's individual mandate program include a provision whereby if you didn't have health insurance, money would be deducted from your tax refund when you filed taxes to purchase it for you?
Posted by Tyro | November 14, 2007 8:42 AM