Massachusetts Uninsured Penalty to Quadruple

I would like to start off today by wishing all of our readers a healthy and happy New Year from all of us on the Health Care Reform Now Blog Team! May 2008 be a fantastic year for all, and hopefully a year in which we will see substantive strides toward health care reform in the United States.

To kick off 2008 I would like to direct your attention to the Boston Globe's Jefffrey Krasner, who has his eye on Massachusetts.

2008 will be an important year for the state's health care reforms, which were signed into law by U.S. Presidential hopeful Mitt Romney during his term as Governor of Massachusetts in 2006. The maximum penalties for remaining uninsured will increase nearly four fold to almost a thousand dollars a year. The cap for 2007 was $219 and was implemented as a forfeiture of the individual's tax exemption, not a fine.

Mr. Krasner provides a nice breakdown of how the penalty fee structure is supposed to work. The amount of the penalty is directly tied to the lowest cost insurance option using a formula determined by the state's Department of Revenue:

Under the formula issued yesterday, the amount an uninsured resident pays for 2008 varies by income and how long the resident goes without insurance. For instance, those 26 and younger that earn too much to qualify for low-cost insurance and who go the whole year without coverage would pay a $672 penalty. Those 27 and older would pay $912, the maximum. Those who have coverage for part of the year would pay a corresponding amount of the penalty.

In addition, those who earn less than 150 percent of the federal poverty level, or $15,324 for an individual won't face penalty.

The fees are based on half the cost of the least expensive insurance plan available to each resident but are capped to avoid excessive fees. Thus, a 60-year-old resident of Boston, who would pay more than $4,600 a year for health insurance provided by the state, could have been hit with a $2,300 penalty. But the maximum possible penalty is $912 for all residents. The draft regulations are available at the revenue department's website at mass.gov/dor.

There is no accurate estimate of how many Massachusetts residents will have to pay the penalty for 2007 yet, due to the fact that the penalty is tied to individual tax returns which are not due for several months.

This will be the crucible in which the mandate approach is tested, and I am certain that as the U.S. Presidential campaign ramps up many eyes will be on the Massachusetts plan. Mandates have been a central part of the political discussions on health care, with Democratic Presidential hopeful Barrack Obama being the only member of his party not proposing one.

SOURCE: "Penalties to rise for shunning insurance: State healthcare levy could exceed $900" 01/01/08
SOURCE: "Massachusetts Dept. of Revenue"
photo courtesy of koalie, used under this Creative Commons license