Penalties and Loopholes are not Taxes

I have waited as long as I could since the U.S. Supreme Court ruling on the Constitutionality of the Patient Protection & Affordable Care Act (PPACA).  The arguments both for and against ring hollow.  As seen here, the entire act is about insurance reform.  It does on a Federal level what States are already doing with Auto Insurance.  It mandates that any adult citizen of the U.S. must have, by any means available, viable medical insurance to cover their needs.  What it further does is create another large government entity, with budget requirements, that will coordinate Health Insurance Exchanges.

The support for the bill is based on the positives that are written that it will do.  So what will this do for certain, if left to go into full effect:

1. It will create federal government jobs related to the creation of and maintenance of the Health Care Exchanges.
2. It will create some competition in the health insurance market (whether that will result in positives or negatives for the average consumer, I will not speculate).
3. It will provide a means for people with pre-existing conditions to break their dependence on a particular job/company because they won’t be rejected for coverage elsewhere.
4. It will provide a means (Health Care Exchanges) for people who don’t currently have coverage to purchase health insurance.
5. It will allow parents to continue to have their “children” on their health insurance until they are 26-years-old.

The arguments against the bill are based on the negatives that some believe it will do.  So what negatives do they believe it will do, if left to go into full effect:

1. (Speculation) U.S. employers are considering whether to drop the healthcare benefits to their employees – Michelle Bachmann
2. (Speculation) It will balloon the size of federal government thereby creating another entitlement program.
3. It will tax people who choose not to purchase health insurance (more on this later).
4. (Logical fallacy) It is imposing taxes via the Judicial Branch of Government (Supreme Court)
5. (Fact) It will expand the Medicaid program (by increasing eligibility)
6. (Fact) It will impose a comply-or-lose-funding mandate on State’s to comply with the expansion (more funding from States, some already bankrupt).

I could go into all of these but it’s been done by so many, so well that it’s not worth spending time on here.  The two points I want to make here are these:

1. The government has always been in the incentive business.  All governments are in the incentive business.  Some government use military force as an incentive, some use civic services, some use ‘national security’, some even use Manifest Destiny as an incentive.  Any way they do it, they are pushing, pulling, prodding and occasionally kicking their citizens to do what they (the government) believe is right.  This is where “sin” taxes on alcohol and cigarettes and gambling came from — “negative incentives”.  This is also where tax breaks for corporations, homeowners, and married parents came from — “positive incentives”.

If you do what they want you to do, you get the carrot (positive incentive) of a tax break.  If you do what they don’t want you to do, you get the stick (negative incentive) by way of a penalty/fee.  The difference between the carrots/sticks and taxes are that carrots and sticks are dependent on your behavior.  If you do A, then B happens.  Taxes are universal…if you do anything an average citizen does (i.e. buy groceries, earn money working, die), then B happens.  The difference is whether A is something you can choose to do or not to do.  When there is a choice in the matter, such as purchasing certain types of investments or engaging in certain legal “sins” (smoking, drinking), then it is a carrot/stick.  In this instance, the behavior in question (which is being incentivized) is purchasing and maintaining health insurance.  Health/life is a certainty.  Maintaining health insurance coverage is a choice.

Beyond being a question of whether it is right for the government to have the power to incentivize the purchasing of a commercial product is the question of whether it is right for the government to incentivize at all.  When it involves the Federal government playing a strong-arm game with State governments over taxpayer-funds, it is a dangerous game that we can do without, but here we are.  For those keeping score, this is similar to how the U.S. Civil War started.

2. The bill in question is called the Patient Protection & Affordable Care Act.  I have no qualms about the bill related to Patient Protection…it does that well.  Where the bill falls on it’s face is in creating affordable care.  Affordability in healthcare is related to three primary players:

• Providers – Doctors, Nurses
• Suppliers – Pharmaceutical & Biomedical companies
• Payers – Insurance Companies, Citizens

This bill may hamstring the payers in the equation but it does nothing about the other two parties.  If the other two parties are not reigned in nothing in this bill will provide more access or affordability to the average American, only more responsibility and more money coming out of peoples’ pockets.

© 2012 His-Stor-E

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• Does Today’s Supreme Court Decision on Health Care Affect Your Business? (smallbizdaily.com)
• Today’s Supreme Court Ruling on the PPACA (Patient Protection and Affordable Care Act or ObamaCare) – Constitutional as a tax (chrisduffel.wordpress.com)
• Wisdom and Fairness of Health Care Law in Question (mschuettblahblahblah.com)
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