The AMA Makes a Wrong Turn

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.  At $49,000 income, an individual who gets a $6,000 health insurance plan from an employer avoids a 25% federal income tax, a 15.3% FICA tax and, say, a 4% 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.   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.

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