NCPA - National Center for Policy Analysis

INSURING THE UNINSURED

June 22, 2006

The American Medical Association wants to require everyone who earns more than five times the poverty level to have health insurance.  The thresholds are $49,000+ for individuals and $100,000+ for a family of four.

Failure to comply would not earn jail time.  It would result in higher taxes, however.

The AMA's mistake (quite common in health policy circles) is a failure to recognize that the uninsured already pay higher taxes because they are uninsured, says John C. Goodman, president of the National Center for Policy Analysis. 

  • At $49,000 income, an individual who gets a $6,000 health insurance plan from an employer avoids a 25 percent federal income tax, a 15.3 percent FICA tax and, say, a 4 percent state and local income tax.
  • If he were uninsured, enjoying taxable wages instead of health insurance, the individual would pay $2,640 of extra taxes each year precisely because he is uninsured.

The problem is not the absence of financial penalties; we already have them.  The problem is that the penalties primarily go to Washington, DC; whereas the free care (if needed) is delivered locally, explains Goodman.

The solution is to coordinate tax and spending programs (Gov. Romney is trying to do this in Massachusetts).  There is no need for a mandate, says Goodman.

Source: John C. Goodman, e-mail alert, June 20, 2006; based upon: "AMA adds individual responsibility to plan to cover the uninsured," American Medical Association, June 13, 2006.

 

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