June 30, 2012
The Supreme Court ruled the mandate in the Affordable Care Act is constitutional, by declaring the fine for non-participation is actually a “tax.” Politicians from both major parties are falling all over themselves to pin or avoid the tax label on their policy.
The ‘fine’ is approximately $750 for not purchasing health insurance. The cost of the health insurance is expected to be around $5,000 per year, or a bit more than $400 per month, around $100 per week.
Hmm. Pay a ‘fine’ or ‘tax’ of $750 for something many Americans cannot afford, or pay $5,000 for something many do not want at such a high price. What will millions of taxpayers do? Will they avoid paying the $5,000 full cost, or will they happily pay the fine, in addition to the full cost? Or will human nature intrude, and millions of people simply avoid both joining and not paying the fine?
The disincentive unintentionally built into the mandate is to cheat. When the massive scale of the tax cheating in the health care reform becomes obvious in a few years, then the Congress will move to subsidize the insurance costs for the Middle Class. They likely will have to increase taxes on the Middle Class to pay for the tax increase on the Middle Class, effectively doubling down on the economic “death spiral” of socialized health care.[Email comments welcome: email@example.com]