- The Washington Times - Tuesday, September 29, 2009


Your editorial “Obama’s taxing logic” (Opinion, Sunday) rightly takes President Obama to task for denying the obvious fact that the financial penalty he proposes to levy on the uninsured is a tax. But an equally serious concern is the misleading claim that he advanced in arguing that position, namely his assertion that when an uninsured individual gets hurt, it is the insured who have to pay. The first problem is that his argument applies to the individual rather than to the group, ignoring the subsidies provided by the rest of the group. The second is that he conflates two different groups of the uninsured.

The uninsured consist largely of two distinct groups: those who can afford insurance but choose to forgo it and those who want insurance but cannot afford it. It is true that those who cannot afford health insurance burden the rest of us with their medical bills, either through the proposed subsidization of their health insurance or through federal bloc grants, as is the case now. Either way, the taxpayer foots the bill. Forcing those individuals to sign up for taxpayer-subsidized insurance does not reduce the cost to the system.

But the other group - made up of the financially able uninsured - is an entirely different story. The 10 to 12 million people in this category are regularly charged 2 to 3 times the actual cost of the medical care they receive, yielding the health care provider a profit margin of up to 200 percent. (Medicare and Medicaid pay slightly below cost, private health insurance slightly above.) Under the current system, the financially able uninsured as a group already subsidize our health care system to the tune of billions of dollars a year. So if one of their number runs up a huge bill that he or she cannot afford, the cost to the system is negligible compared to the subsidy the group as a whole provides.

The real reason for fining the financially able uninsured, or forcing them to take out insurance they don’t want to purchase, is to put billions of dollars of revenue a year into the system. That extra revenue would subsidize the already insured, holding their costs down for at least a couple of years. However, we soon would be back in the same mess because the mandated fee or coverage doesn’t bend the cost curve; it only shifts the cost to the (mainly young) financially able uninsured, forcing them to bear a disproportionate share of the burden of the “reforms.” It doesn’t actually reduce overall costs.

Mr. Obama’s use of this argument is very damaging because it can sway the poorly informed with false but reasonable-sounding arguments. If it isn’t technically a lie, it certainly is misleading and not fully truthful.



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