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Individual Mandates In Massachusetts: It's Cheaper To Pay The Fine

by Fard Johnmar — last modified Nov 16, 2007 02:57 PM

Massachusetts is urging residents to enroll in a health insurance plan or pay a fine. Right now, it's cheaper to pay up. Does this bode well for the Bay State's great individual mandate experiment?

Individual Mandates In Massachusetts: It's Cheaper To Pay The Fine

Recently Massachusetts, which famously requires all individuals to purchase health insurance sent a post card to residents warning them to enroll in a plan. 

According to David Williams of the Health Business Blog:

“In the mail today was a friendly reminder – ok, actually an ‘urgent message’ to buy health insurance or face the consequences. In this case it means a $219 penalty per individual on the 2007 tax return and larger penalties in future years. Although it’s still cheaper to pay the penalty than to buy insurance, the tax return threat could impel some people to make the move.”

However, some have observed that some state residents – especially healthy ones – may not feel compelled to comply.  In fact, they may feel a great urge to disobey.  According to the Consumer’s Health Insurance Blog:

“The penalty is $219 per individual and applies if you don’t have health insurance, or if you don’t have enough health insurance. Massachusetts is one of a handful of states that has community rating. Community rating is where everyone in the community pays the same rate, with minor adjustments such as where your community is in the state . . . In the end, [community rating] means that those people who are very healthy don’t buy health insurance.

[I]f you’re healthy and have the choice of paying a $219 penalty for a whole year versus at least that much each month for health insurance that you never use, which are you going to choose?”

Good question.  Will healthy uninsured individuals living in Massachusetts find it easier and less of a hassle to pay the fine?  Clearly, the Bay State’s massive consumer-driven experiment is revealing some interesting insights.  This should be food for thought for presidential candidates recommending individual mandates similar to Massachusetts’. 

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