Obama Explains Why An Individual Mandate Is Not A Tax Increase

This morning, during an appearance on ABC’s This Week, President Obama vehemently defended a provision of health reform that would require all Americans to purchase health insurance coverage.

During the interview, host George Stephanopoulos insisted that compelling Americans to purchase coverage and fining them if they don’t, is a tax increase. Obama argued that the continued cost-shift of caring for the uninsured increases premiums for all Americans:

Well, hold on a second, George. Here — here’s what’s happening. You and I are both paying $900 bucks on average — our families — in higher premiums because of uncompensated care. Now, what I’ve said is that, if you can’t afford health insurance, you certainly shouldn’t be punished for that. That’s just piling on. If, on the other hand, we’re giving tax credits — we’ve set up an exchange, you are now part of a big pool, we’ve driven down the costs, we’ve done everything we can, and you actually can afford health insurance, but you’ve just decided, You know what? I want to take my chances, and then you get hit by a bus, and you and I have to pay for the emergency room care, that’s…

What it’s saying is, is that we’re not going to have other people carrying your burdens for you any more than the fact that right now everybody in America, just about, has to get auto insurance. Nobody considers that a tax increase. People say to themselves, that is a fair way to make sure that, if you hit my car, that I’m not covering all the costs.

Watch it:

The Center for American Progress has estimated that the failure to continuously cover all Americans accounts for roughly 8 percent of the average health insurance premium. The cost-shift amounts to $1,100 per average family premium in 2009 and $410 per average individual premium. By 2013, assuming the cost shift remains the same percentage of premium costs, “the cost shift will be approximately $480 for an individual policy and $1,300 for a family policy.”

In fact, even some Republicans dispute the notion that an individual mandate is a tax increase. Just last month, when asked “how does this bipartisan group that you`re a member of get to more health insurance coverage if you don`t mandate that employers provide coverage,” Sen. Chuck Grassley (R-IA), the ranking member on the Senate Finance Committee, replied “through an individual mandate and that`s individual responsibility and even Republicans believe in individual responsibility.”

During a June appearance on Fox News Sunday, Grassley said, “there isn’t anything wrong with it [an individual mandate], except some people look at it as an infringement upon individual freedom”:

But when it comes to states requiring it for automobile insurance, the principle then ought to lie the same way for health insurance. Because everybody has some health insurance costs, and if you aren’t insured, there’s no free lunch. Somebody else is paying for it….I believe that there is a bipartisan consensus to have individual mandates.

After publicly endorsing the individual mandate for the last nine moths, Grassley has recently declared that he now opposes the individual mandate.

Under the bills proposed in Congress, Americans who don’t qualify for a hardship waiver would have to pay a penalty if they chose not to purchase coverage. Under the Kennedy health bill, individuals without health insurance coverage would pay a maximum penalty of $750 per individual; the House health bills impose a 2.5% fine on an individual’s modified gross income. The Senate Finance Committee bill charges families 400% above the federal poverty line up to $3,800 for failing to purchase coverage.