Health Care

Will You Go to Jail If You Don’t Have Insurance?

Jack Balkin says that the answer is no.

Balkin is correct that, technically, anyone who does not buy insurance under the new set of laws will only have to pay a tax (or as I prefer to think of it, a fine).  Only if they refuse to pay the fine will they then, eventually, be sent to jail as a tax evader.  Fair enough.  But the general point still remains.  If you do not comply with this new law – you will be sent to jail.  Being sent to jail for refusing to pay the fine is only morally different if the fine has some particular justification.

Balkin argues that the fine (or as he prefers to think of it, tax) is justified by free-rider problems:

If lots of people (and especially young and mostly healthy people) don’t buy health insurance, the cost of insurance goes up for everyone, and it is passed on to others in the form of higher premiums. In addition, people who don’t buy health insurance tend to wait until their health problems are severe and then use emergency services; they may contract communicable diseases (which they may pass on to others) or they may become disabled. All of these costs get passed along to others–in the form of higher premiums and higher costs for hospitals and insurers–or they have to be absorbed by federal and state governments through programs for the poor or the disabled.

So if you don’t buy health insurance, you are increasing costs for other people. The federal government is taxing you to recoup some of those costs. An analogy would be taxes on alcohol or tobacco, although these taxes are usually worked into the retail price of the goods so that people don’t even have the opportunity to refuse to pay them. Another example would be taxes on an enterprise that is creating additional costs to the environment through pollution; the government taxes you if you don’t purchase and install anti-pollution equipment.

Balkin skips more than a few steps with this analysis.  In significant part, health care free riding is only possible because there are laws that legalize free riding.  For example, the laws requiring hospitals to treat all emergency room visitors, regardless of their capacity/intent to pay, are an invitation for free riding.  The costs of treating any of these patients who do not pay will be passed on to all of the hospital’s paying patients.  If we really wanted to eliminate this free rider problem, we would just make people pay for their emergency room visits – or we would at least not require hospitals to receive people without insurance.

The current health care reform is not a brilliant scheme to end free riding.  In large part, it is an attempt to write more free riding into law.  It requires insurance companies to transfer health care costs from sick to healthy patients.  It enacts massive subsidies that transfer costs from the poor to the wealthy.  These transfers are very much like actual free riding, and they would not occur in an efficient insurance market that had no free riding.

Balkin shrugs and says that “tax policy does this all the time”.  And so it does.  And opponents of these subsidies are right to remind the rest of the electorate that their participation is not voluntary, but enacted through threat of imprisonment.  Health care reform is commonly assumed to be in everyone’s benefit, but this is of course not the case.  The threat of jail time lies behind every government “charity”.

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