Healthcare

2019 penalty for not carrying health insurance

Thanks to the 2018 tax legislation after 2018 the penalty is …

$0

but there is nothing to cheer about.

In order to keep any insurance reasonably affordable, you need a diverse risk pool. That simply means you need people paying premiums who incur little or nothing in the way of claims. That is why there was an insurance mandate in Obamacare in the first place.

The Trump administration’s elimination of the incentive to carry coverage is shortsighted and will be costly to many Americans in two ways.

First, the premiums for those who do carry insurance will be higher because those likely to forgo insurance will not be those with significant health care needs.

Second, to the extent the uninsured do incur health care bills, they will be the responsibility of society one way or another.

Once again politicians and policy makers ignore the consequences of their actions.

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7 replies »

  1. As much as I am a capitalist and I am a believer in free markets, our sense of moral obligations has skewed the expectations for medical care. For the free market approach to work, emergency rooms would have to turn away people who did not buy insurance or have the cash. Otherwise what is the true penalty for not having insurance. Morally, nobody wants that and many states have laws against that policy.

    The socialism answer would be Medicare for All. But then morally, how much do you spend on each person? Do you restrict access or procedures? Do you tax people to the point they can’t live the American dream? Is Medicare for All the lowest form of coverage like min coverage auto insurance, just enough to get them in the door and stabilize the patient until the family decides to sell everything to pay for treatment? What doctor wants to make decisions based the ability to pay alone? The rich will still pay for the best healthcare because they can. Will this result in another Occupy Wall Street type of protest?

    The libertarian point of view is why is the government interfering in my personal life and making me buy insurance. It is not mandated in the US Constitution.

    A fourth option (that will not work either) would be to open government run hospitals and clinics. Think of the VA hospital system but even worse. People who can’t pay or don’t have insurance can be sent there easing the burren on the rest of the paying healthcare system. People will be dying while waiting to be seen. Treatment will be rationed and procedures limited. But this would be the best incentive to buy health insurance. Employers will want to offer health insurance again as a benefit to be seen as a great place to work or to keep its workforce healthy and on the job. Of course some areas in the country will not have the population to have government run clinics.

    (As a note here in New Jersey, several counties had run hospitals, clinics, and nursing homes but got out of that business because the private sector could do it better. But even those have closed because government reimbursement rates keep getting smaller to could Medicare & Medicaid costs.)

    Before we decide on who must have insurance, we as a society, have to come to a common answer on the moral questions of our expectation for treatment. Why is it okay to spend a million dollars on a premature baby? Why should the insurance company spend a million dollars on a 70 year old cancer patient to live 6 months longer? What can that baby contribute back to society over its lifetime? What possible things can a 70 year old contribute to the world in 6 months that he has not done in the prior 70 years? Why are drug companies marketing on TV that you must live forever? Life is afterall terminal. Why are politicians buying votes with Medicare for All?

    I can argue both sides until it happens to me then I want what I am “entitled to”. But we will never solve the medical insurance question until society puts some kind of limits of “the sky’s the limit thinking” on care vs. costs. Then society needs to decide how much we can afford through premiums or taxes to provide the agreed upon healthcare. Agreement is something that I have rarely seen out of Washington in the last two decades.

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  2. Not sure who you mean are gaming the system.

    Are people who could, but don’t buy health insurance gaming the system or are they making a calculated risk decision based on probability of needing money to pay medical costs.. If they stay out of the system it will drive premium costs up but at some point in time or due to changing health conditions they will make the decision that being in the system will benefit them and then they will have to pay the higher premium.

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      • I have to disagree with you. I’m looking at it on a global rather than an individual basis. The mandate was put in place in Obamacare to eliminate adverse selection. With the mandate gone, premium rates will rise. At the point where someone belatedly enters the system, they will face the higher rate rather than the lower rate that would be in place if the mandate (incentive as you say) was still in place. Yes it raises the rates for everyone in the system but they are not assuming the personal risks that a person choosing to not join the system assumes.

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  3. So what is the answer? The free market where you can choose to buy or not buy health insurance, or keep the fine {or should I say tax) in place for not purchasing health insurance. Of course there is the third option….Medicare for all.

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