Health Care Mandates: We Already Have Them

Moneybox
A blog about business and economics.
April 2 2012 3:13 PM

Financial Penalties for Not Buying Health Insurance Are the Foundation of U.S. Health Care

The hidden health care mandate doesn't seem to bother the Tea Party
The hidden health care mandate doesn't seem to bother the Tea Party

Photo by Mladen Antonov/AFP/Getty Images.

I published a column over the weekend about the fact that financially penalizing people for not buying health insurance is already the core of the American health insurance system. It's just that instead of saying "you pay a fine if you ask your employer to give you higher wages instead of subsidizing your insurance premiums," we say that "if your employer subsidizes your insurance premiums instead of paying you higher wages, you don't need to pay taxes on that." But the impact on your pocketbook and the system as a whole is identical.

It turns getting insurance into a smart decision even for customers for whom it's not an actuarially savvy decision, and the presence of those customers keeps the entire risk pool viable. As a legal matter, the slight difference in how it's organized may be crucially important, but as an economic matter these are very similar policies, and if you're interested in the broad implications for human liberty of penalizing people for not getting insurance, you have a much bigger battle on your hands than the war on Obamacare.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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