His Excellency MoebiusLord wrote:
The fine is too small to provide the fear of punishment, and the option to purchase "insurance" after you get sick removes the risk factor.
It's not a punishment at all, it's a change in the opportunity cost. There is a continuous spectrum of individuals with varying degrees of health risks. For some people with very low risks these is little to gain by buying health insurance and a lot to pay. There are those with very high risks who probably already have insurance. And there are those in the middle on the fence. A fine decreases the benefits of not having health insurance so that some of those who would normally optimize having no insurance now optimize by having insurance.
So in 2016 you could be penalized $2,085 or 2.5% of your income for not owning health insurance. I just googled a random insurance plan costing $3,144 annually. This plan provides some quantity of benefit to me, if I'm a risky person it provides more and if I'm a healthy person it provides less.
There are three scenarios here. Before the fine the question of whether to buy health insurance was simple. If the value > $3,144 annually then I would buy the plan, and if the value < $3,144 annually, then I wouldn't buy the plan. The fine changes that. Because I'm now going to have to pay $2,085 for not having insurance, I will now buy the insurance if the value > $1,059 (3144-2085) and not buy the insurance if the value < $1,059 (3144-2085).
Previously anyone who valued the insurance policy between $3,144 and $1,059 would not have bought it. Now everyone who values it between $3,144 and $1,059 will switch to buying that plan and having insurance, because they optimize by buying under the fine when they previously would have optimized by not buying without it.
Why are you struggling with simple math?
His Excellency MoebiusLord wrote:
Healthy individuals will pay the government, not spreading the risk of the insurance companies.
Why are creating some contrived separation between paying the government or paying private companies? People who don't have insurance and get sick still cost money; they don't magically disappear. So when a person without insurance goes in for an emergency procedure, they've only paid their share of taxes for the procedure leaving the rest of the cost to everyone else. However, when they're fined for not having insurance they've paid their taxes plus the fine for that procedure, so more of the financial risk is directed to them.
The money earned from fining people has to go somewhere. It doesn't magically disappear. That money has to come back to the people who are buying insurance. The government can either increase services to the public or it can maintain current services at a lower tax cost. A fine for not buying insurance is a subsidy for those who buy insurance. The cost is spread out more evenly for everyone.
Again, it's perfectly valid to argue that none of this is good or beneficial, but it's entirely idiotic to argue that it is not being achieved.
Edited, Apr 19th 2010 5:36pm by Allegory