It's a Tax
Forcing people to pay money or pay a fine on their tax return to buy a product they currently don't buy is a tax. Particularly when that product will likely be over-priced to the young and healthy not buying it today to subsidize the older folks.
Mesa Econoguy:
Ah, but not when Obamalini The Great says its not, with his years of economic training, and extensive private sector experience.
Just witness the unimpeachable (?) logic:
[Obama's Nontax Tax]
Seriously, this guy’s on drugs. Or he’s a loony. Possibly both.
September 21, 2009, 6:49 pmme:
And here I was figuring the administration was going to go with the sophisticated argument that it wasn't a tax increase but a new tax...
US politicians are weird, they don't even try to pretend to stick by what they promised before the election. Then again, if your constituency let's you get away with murder quite regularly, why not promise everyone candy and a pony upfront?
September 21, 2009, 7:21 pmEvil Red Scandi:
Obama's also taxing my patience.
And his credibility.
And the definition of the word 'tax.'
September 21, 2009, 10:41 pmQuincy:
Again, the simple things elude Obama. When the Feds will throw you in jail for not paying, it's a tax. Period.
September 21, 2009, 10:53 pmepobirs:
I wouldn't put it quite that simply, Quincy. It is possible to incur a debt for a government based service that was a choice on your part rather than imposed upon you, as in this case. OTOH, there is rarely a good case for the government to do that kind of stuff as opposed to private enterprise, as seen in our host's business.
When people with the ultimate authority to imprison me or even kill me come demanding money for a service I did not request nor want, that is a tax. You cannot weasel out of this, Mr. President. You are going to tax healthy young people who no health care beyond catstrophic coverage.
http://www.amazon.com/Parliament-Whores-Humorist-Attempts-Government/dp/0802139701/ref=sr_1_1?ie=UTF8&s=books&qid=1253601226&sr=8-1-spell#reader
September 21, 2009, 11:36 pmepobirs:
Well, that didn't work right. Search inside the book for the word mother or go right to page 100.
September 21, 2009, 11:38 pmChris:
Call it a tax, or don't call it a tax, it doesn't matter.
If we are going to force insurance companies to ignore pre-existing conditions, then you have to force people to get insurance. Otherwise, you have the classic free-rider problem, where nobody will get insurance until they get sick.
From a purely libertarian standpoint, you can argue that the government shouldn't be "forcing" either party to do anything. But that will leave us where we are now, where would-be entrepreneurs with health issues don't go out on their own, for fear of losing insurance coverage, and people with bad genes (i.e. predisposition for cancer) face bankruptcy.
Perhaps a better way to address this problem would be to say that insurance companies only have to ignore pre-existing conditions for people switching insurance (and therefore not the free-riders). But from a libertarian standpoint, you would still be "forcing" the insurance companies to take on the previously insured. And, regardless of how much information you provide them, young adults are unlikely to properly weigh the value of some long-in-the-future insurability issue vs. saving money now by not buying insurance.
So, given the largely (but not completely) random allocation of health risks, it seems to me that a trade-off where insurance companies have to take you, and you have to have insurance, is reasonable. Rather than fight that trade-off, libertarian/conservatives should fight to ensure that people are free to choose a minimalist coverage plan.
September 22, 2009, 3:58 amChuck:
Why not allow the insurance companies to reject people with pre-existing conditions, but require that they continue to cover any condition that is diagnosed while you are on their policy ... even if you switch companies or drop insurance altogether. Basically if you are insured when you are diagnosed then that insurance company owns your problem until some other insurance company accepts it (by, for example, passing the preexisting conditions threshhold).
This also eliminates the incentive to drop people after they get sick since that doesn't eliminate the liability (it only eliminates the premiums).
September 22, 2009, 4:36 amhoipolloi:
Sure it's a tax -- a tax to fund a giant public/private insurance pool to force young/healthy to overpay and allow old/sick to underpay. The politics and language of this part of the debate are pretty familiar to everyone who is paying attention, and Obama can wink/nod himself through these arguments while pretending to be appalled. Because for the majority of people who need insurance, the ability to coerce the young to help pay for their healthcare is a feature of the program.
The way to counter this is to look at the likely end result of a mandate -- Consumers will be another step further removed from paying the actual cost of their medical care.
September 22, 2009, 6:03 ammorganovich:
a question (off topic) on pre existing conditions:
in california, most plans have a 6 month window on pre existing conditions. after that, they will pay to cover it. further, most will waive that 6 month period if you have contiguous health coverage, which is to say you had health insurance withing the last 3 months.
between these 2 these 2, few people with real, ongoing conditions wind up excluded, but the people who need surgery and suddenly sign up for a health plan at at least dissuaded. it seems a reasonable plan, and, surprisingly to me, CA health plans are not expensive compared the the rest of the country (they are about middle of the pack)
how does this work elsewhere?
also: total aside, but do our leaders seem to have an increasingly tenuous grasp on the english language? (recall bill clinton's definition of "i did not have sex with that woman" try it with your spouse and see how it goes over) obviously this is a tax, and far more so that even auto insurance. auto insurance can at least be (tenuously) viewed as a requirement to use government property (roads). you don't need it to drive a tractor on your farm, nor do you need it if you don't own a car. so at least there is some way out.
there is no way out of this health insurance compulsion. that makes it a de facto tax, even if the money is going somewhere other than the government. call it a tax or a compulsory directed subsidy, but either way, you have to cough up the cash.
astoundingly, all the new regulations that go along with it will make this tax larger by making plans more expensive. they really get you coming and going on this one...
September 22, 2009, 6:21 amhoipolloi:
If a mandate passes, insurance companies will be in a race to attract young/healthy policyholders and overcharge them. While alienating and driving away everyone else.
I used to work for a car insurance company that would "show you the rates of competitors" when quoting potential customers on the website. The rating software had discovered that drivers with a clean record except for one DUI were statistically no more of a risk than drivers with a totally clean record. While every other insurance company would be quoting those people $2,000 a half, what did we do? Well, the rating software would come up with something like $600/half. But that wasn't the price they were offered. No, on the website they'd see three $2,000 quotes from competitors and an $1,800 quote from us. And the customer would happily accept. And the company would pocket huge profits on these customers.
Conversely, when a high-risk potential customer applied for a policy, our software would quote them an artificially high price that was more expensive than the actual risk they represented. While displaying the far more reasonable prices of our competitors.
This wasn't all necessarily bad for the consumer and I don't condemn an insurance company for doing this either. Depending on the regulations of a given state, this type of approach wasn't always feasible. And because auto policies are short and non-binding, most state markets are competitve for the consumer who shops around. The key is how many options a consumer has. If there are 100 auto insurance companies offering policies it is far more likely a consumer will pay a price that represents their actual risk.
I say this because companies will do everything they can to insure the most profitable customers. If there is a mandate, that incentive doesn't change.
September 22, 2009, 6:39 amCharlie B:
hoipolloi - one of the musts in the House and Senate plans is "community rating" where everybody will pay the same premium regardless of age, sex, etc. etc. etc.
September 22, 2009, 7:10 amLink:
You can look it up. The individual mandate is in Title IV of HR 3200. It amends the Internal Revenue Code of 1986 by adding a new Part VIII ... Health Care Related Taxes. Here's a sample:
"SEC. 59B. TAX ON INDIVIDUALS WITHOUT ACCEPTABLE HEALTH CARE COVERAGE
(a) Tax Imposed- In the case of any individual who does not meet the requirements of subsection (d) at any time during the taxable year, there is hereby imposed a tax equal to 2.5 percent of the excess of -- (1) the taxpayer's modified adjusted gross income for the taxable year, over `2) the amount of gross income specified in section 6012(a)(1) with respect to the taxpayer."
This isn't even a flat rate fine, as it varies based on your income. It'd be enforced by the IRS.
The Senate mark-up of "America’s Healthy Future Act of 2009" has the following:
"Excise Tax. The consequence for not maintaining insurance would be an excise tax. ....
"The excise tax would be assessed through the tax code and applied as an additional amount of Federal tax owed.
But it's not a tax, if Obama says it's not. As Richard Pryor would say, "who are you going to believe, me or your lying eyes."
September 22, 2009, 7:20 amQuincy:
epobirs -
To rephrase it: When the Feds will throw you in jail for not participating and paying, it’s a tax.
There are things which I can voluntarily obtain from government for a fee. This is not one of them.
September 22, 2009, 8:47 amilovebenefits:
It would be a breath of fresh air if we could simply call a tax, a tax. Then we could focus on the real issue, the cost of the proposed programs. The next step is to determine through constructive debate, if that is what the citizens, want to spend their dollars on.
With each side spinning words, ideas, and telling half the story the process leads to mistrust.
For example, citing insurance premium increases as the problem. Trying to infer that it is the insurance companies that are the root cause of the increases rather than the price - one third of the annual increase- and utilization - two thirds of the annual increase.
Prices are going up 3-5% annually, utilization 6-10% annually. Utilization is a result of people, for example, living longer and medicine finding solutions or treatments for more diseases.
http://www.ilovebenefits.wordpress.com
September 22, 2009, 9:51 amMichael Miller:
Instead of spending his spare time ham boning on shows like Letterman, maybe he should consider auditing a few night classes, and bone up on basic economics.
George Mason University would be a very good choice.
September 22, 2009, 10:00 amian:
My favorite part was when the president referred to the government as the responsible parent, and the general public as foolish, disobedient children. In that context, a lot of things make sense.
September 22, 2009, 10:09 amTexas_Engineer:
In the world of Washington words have no meaning.
A confiscation of your money is not a tax.
And spending is not really spending - it is an investment.
And future commitments (medicare, social security) do not have to be on the balance sheet (unless you are a private company and have to use GAAP accounting practices.
September 22, 2009, 10:17 amMethinks:
how does this work elsewhere? - Morganovich
In Connecticut, Pre-existing conditions are not covered for the first 12 months of new coverage. After that exclusion period, pre-existing conditions are fully covered. A pre-existing condition is a specific condition for which you sought treatment within six months prior to the start of the new health insurance policy.
September 22, 2009, 2:56 pmMethinks:
In the world of Washington words have no meaning.
A confiscation of your money is not a tax.
And spending is not really spending – it is an investment.
And future commitments (medicare, social security) do not have to be on the balance sheet (unless you are a private company and have to use GAAP accounting practices.
And disagreeing with the Dalai Bama is racism
September 22, 2009, 2:57 pmCilla Mitchell:
Well, since the President referred to the public as "foolish, disobedient children," I will live up to his statement and just not pay my taxes. That should be expected of disobedient children.
September 23, 2009, 9:03 amI have already notified the IRS various times, and even went to their office and told them to put me in jail because I refuse to ever pay them another cent again. Seems like the jails are full, because I am still free, writing on this blog.
Methinks:
Cilla,
If you owed the IRS seven figures, I bet they'd be at your door pronto and they'll find room in jail for you. Also, if you are ever on the radar for any other reason (like political activity against the ruling party), suddenly the IRS will wake up and find a reason to harass you.
But, until then, GO FOR IT!!!
September 23, 2009, 11:06 amhoipolloi:
Thanks Charlie B, but my understanding of community rating is that insurance companies would still be able to adjust premiums for things like age and gender, but wouldn't be able to rate based on pre-existing conditions, family-history, etc.
Obviously, though, it is up to the actual legislation to spell that out in more detail. I know in auto insurance it varies by state what insurance companies may rate on. My assumption is that insurance companies will still be able to rate on _some_ criteria that varies person to person. But maybe I am wrong on that.
September 23, 2009, 1:39 pmPeter:
Hoipolloi HR 3200 also states that there is a maximum rate difference from the lowest rates to the highest. That maximum is set at 2 times. So if a 20 something in good health is paying $1500 per month then the 70 year old with cancer cant be charged more than $3000 for the same coverage. A good recipe to drive private insurers out of business. OTOH if they want to charge $6000 for the senior then the 20 something would have to pay $3000. An obvious tax subsidy.
September 23, 2009, 4:59 pm