Questions, answers on requiring health insurance

[September 09, 2009]  BOSTON (AP) -- Should the federal government require virtually all Americans to be insured or face thousands of dollars in fines? Proponents say this requirement is crucial to extending coverage and reining in costs as Massachusetts has done. Critics say it would impose an unfair burden on individuals and families already struggling in harsh economic times.

A look at the issue in question-and-answer form:

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Q: What's being proposed?

A: Democratic Sen. Max Baucus of Montana, chairman of the Senate Finance Committee, is proposing that, as part of any overhaul, insurance be mandatory for all Americans, much the way car owners are required to have auto coverage. People making up to three times the federal poverty level -- about $66,000 for a family of four and $32,000 for an individual -- would be eligible for tax credits to help cover the cost of premiums. Those who fail to get insurance would face stiff fines, from $750 a year for an individual to $1,500 for families. The maximum penalty on individuals would be $950, while families could face maximum fines of $3,800.

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Q: What is the proposal based on?

A: The plan is based in part on an element of Massachusetts' sweeping health care law, known as an "individual mandate." When Massachusetts passed the 2006 law, it became the first state to require that virtually all residents have health insurance or face a series of steadily increasing fines. To help soften the penalty, Massachusetts first created state subsidized insurance plans for those earning up three times the federal poverty level, with the poorest residents getting essentially free care and those earning more paying increasingly higher premiums and copays. The state also created a Health Care Connector -- similar to the "health care exchange" being proposed on a federal level -- to help those ineligible for subsidized care connect with lower-cost private health plans. Finally, Massachusetts decided to exempt from fines for anyone who doesn't qualify for the subsidized plans but still can't find any affordable private plan based upon state affordability standards.

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Q: Who has been fined in Massachusetts?

A: Massachusetts decided to phase in its fines. During 2007, the first full year of the health care law, those who refused to get insurance lost the personal exemption on their state tax returns -- equivalent to a $219 fine. In subsequent years, the fines were scheduled to increase dramatically. In 2008, a fine for an individual who could afford insurance but refused was $76 for each uninsured month or $912 for the entire year. For couples, the maximum fine for the entire year would be $1,824. In 2009, the fines increased again, to $89 a month or $1,068 for an entire year for an individual. For couples, the maximum fine was $2,136.

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Q: So how many people have actually been fined in Massachusetts?

A: The state has so far only released numbers for the first year. In 2007, nearly 3 percent of state's taxpayers -- about 97,000 filers -- were uninsured even though they could have afforded health care and were stripped of the $219 exemption. An additional 2 percent -- or about 62,000 filers -- were found not to earn enough for health care and weren't fined. The state allows taxpayers to appeal the fines. Numbers for 2008 are expected later this year.

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Q: Why have fines at all?

A: There are a few basic arguments for requiring health care for as many people as possible. One argument is that it spreads risk among as wide a group as possible, which helps lower overall costs. Another argument is that insuring the largest number of Americans will take some of the pressure off premiums for those who are already insured. President Barack Obama has said insured Americans pay what amounts to a hidden fee to help pay hospitals for the cost of covering the uninsured. Without fines, advocates say, there would be no way of enforcing the mandate.

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Q: What has Obama said about an individual mandate?

A: During the presidential campaign, Obama criticized the idea of fining individuals for not having health insurance. During a Democratic debate in February 2008, Obama warned that fines could lead to a situation like that in Massachusetts, where, he said, some residents were choosing to accept a fine because it was less expensive than health care premiums. "We don't want to put adults in a situation in which, on the front end, we are mandating them, we are forcing them to purchase insurance, and if the subsidies are inadequate, the burden is on them, and they will be penalized," he said.

[Associated Press; By STEVE LEBLANC]

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