Matt Drudge and WorldNetDaily.com both falsely asserted that, in Drudge's words, the House health care reform bill states that people must "buy a $15,000 policy or go to jail." In fact, as stated by the Joint Committee on Taxation letter on which Drudge's and WND's claims are based, the bill does not impose criminal penalties on people merely for failing to purchase health insurance; rather, people who do not buy health insurance and also willfully refuse to pay the tax imposed on them for such actions can face civil or criminal penalties.
Drudge, WND falsely claim bill requires people to buy insurance or go to jail
Drudge: "PELOSI: Buy a $15,000 Policy or Go to Jail; Failure to Comply, 5 Years in Prison." From the Drudge Report (click on image to enlarge):
WND: "Confirmed: Buy insurance or go to jail." WorldNetDaily.com headlined a November 6 article by Bob Unruh "Confirmed: Buy insurance or go to jail." The subheadline read, "'This is ultimate example of Dems command-and-control government.' " Unruh's first paragraph read: "A Michigan congressman has released a report from the non-partisan Joint Committee on Taxation confirming that the House Democrats' health-care bill could impose penalties of up to $250,000 in fines and five years in jail for failing to buy the proper insurance coverage." [11/6/09]
Claim that people will go to jail for failure to buy insurance is false
Contradicting headline, lead sentence, Unruh himself notes that criminal penalty is for those who fail to pay tax, not those who fail to buy insurance. The eighth paragraph of Unruh's article states: "According to [Rep. Dave] Camp [R-MI], the JCT letter makes clear that Americans who do not maintain 'acceptable health insurance coverage' and who choose not to pay the bill's new individual mandate tax 'are subject to numerous civil and criminal penalties, including criminals fines of up to $250,000 and imprisonment of up to five years' " [emphasis added].
Penalty for failure to purchase insurance is a tax, not jail time. Indeed, as Unruh acknowledged in his eighth paragraph, Section 501 of the bill provides that an individual must be "covered by acceptable coverage at all times." "Acceptable coverage" includes "qualified health benefits plan coverage," "grandfathered health insurance coverage," "Medicare," "Medicaid," coverage provided to members of the armed forces and their dependants, "coverage under the veteran's health care program," people who receive health care "through the Indian Health Service," or other coverage deemed acceptable by the Secretary of Health and Human Services. If a person does not have acceptable health care coverage, Section 501 imposes a tax on that person "not to exceed the applicable national average premium":
(a) TAX IMPOSED.-In the case of any individual who does not meet the requirements of subsection (d) at any time during the taxable year, there is hereby imposed a tax equal to 2.5 percent of the excess of-
(1) the taxpayer's modified adjusted gross income for the taxable year, over
(2) the amount of gross income specified in section 6012(a)(1) with respect to the taxpayer.
(1) TAX LIMITED TO AVERAGE PREMIUM.-
(A) IN GENERAL.-The tax imposed under subsection (a) with respect to any taxpayer for any taxable year shall not exceed the applicable national average premium for such taxable year.
Bill does not impose tax on those below the threshold for filing a federal income tax return. The Joint Committee on Taxation states: "The additional tax does not apply ... if the person's income is below the threshold for filing a Federal income tax return." Indeed, Section 501 of the bill imposes taxes on "the excess of ... the taxpayer's modified adjusted gross income for the taxable year over ... the amount of gross income specified in section 6012(a)(1)" of the Internal Revenue Code. Section 6012(a)(1) of the Internal Revenue Code provides that "a return is not required of an individual [who] ... has gross income of less than the sum of the exemption amount plus the basic standard deduction applicable to such an individual."
"Hardship cases" are exempted from the tax. From Section 501(f):
(f) REGULATIONS.-The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of this section, including regulations or other guidance (developed in coordination with the Health Choices Commissioner) which provide-
(2) a waiver of the application of subsection (a) in cases of hardship, including a process for applying for such a waiver.
Willful failure to pay taxes of any sort can result in civil or criminal penalties. Drudge links to and Unruh quotes from a press release by Rep. Dave Camp (R-MI) that in turn relies on a letter from the Joint Committee on Taxation. That section of the letter dealing with "civil and criminal penalties for noncompliance specifies that Camp asked the committee to "discuss the situation in which the taxpayer has chosen not to comply with individual mandate and not to pay the additional tax." Thus, the letter is not discussing the penalties for failure to buy insurance, but the penalties for both failing to buy insurance and failing to pay the tax. The committee's letter explains that the tax code provides penalties to prevent tax evasion of any sort: "The Code provides for both civil and criminal penalties to ensure complete and accurate reporting of tax liability and to discourage fraudulent attempts to defeat or evade tax." [Joint Committee on Taxation letter, 11/5/09]
Fewer than 100 people convicted for "willful failure to file or pay taxes" in fiscal year 2008. From the Joint Committee on Taxation letter: "Of the 666 convictions reported above for fiscal year 2008, fewer than 100 were convictions for willful failure to file or pay taxes under section 7203." [Joint Committee on Taxation letter, 11/5/09]
Most delinquent taxes and penalties "collected through the civil process." The Joint Committee on Taxation letter states:
The majority of delinquent taxes and penalties are collected through the civil process. In determining whether a penalty applies along with an adjustment to a tax return, the examining agent is constrained not only by the applicable statutory provision, but also by the written policy of the IRS not to treat penalties as bargaining points but instead to develop the facts sufficiently to support the decision to assert or not to assert a penalty. [Joint Committee on Taxation letter, 11/5/09]
Drudge, WND falsehood echo one made about Senate version of bill
Kudlow distorts health insurance mandate to claim violators "face a $25,000 fine, or imprisonment, or both." On his CNBC show, Larry Kudlow distorted a provision in the health care reform bill proposed by Sen. Max Baucus (D-MT) to claim that "if an individual opts out of this insurance plan ... apparently they face a $25,000 fine, or imprisonment, or both." In fact, the bill would levy a $1,900 "excise tax" on those who don't purchase health insurance; those who refuse to pay the tax could face a fine or prison sentence, as the Wall Street Journal editorial Kudlow cited as the source of his claim clearly stated. [9/29/09]
Drudge's suggestion that all people must spend $15,000 on insurance is false
Individual insurance costs $5,300; family insurance costs $15,000. The CBO analysis to which Camp links states "Although premiums under H.R. 3962 would vary by geographic area to reflect differences in average spending for health care and would also vary by age, the table shows the approximate national average for that lower-cost reference plan-about $5,300 for single policies and about $15,000 for family policies in 2016." Thus, not everyone will have to "buy a $15,000 policy" as Drudge claims.
Subsidies available for lower-income people. Subtitle C of the House bill makes "affordability credits" available to lower income individuals to help pay for health insurance. As the House tri-committee summary of the bill explains:
Sec. 341. Availability through Health Insurance Exchange. Creates affordability credits to ensure that people with incomes up to 400% of federal poverty have affordable health coverage. These credits are phased out according to a schedule defined in the act as individual and family incomes up to 400% of poverty and the credits apply only to Exchange-participating plans. Affordability credits reduce the costs of both premium and annual out-of-pocket spending. Individuals apply through the Commissioner or Health Insurance Exchange for the credits, or through other entities approved by the Commissioner. The Commissioner, through an agreement with the Commissioner of Social Security, must conduct a verification process to confirm citizenship or lawful presence in the United States before any individual is eligible for affordability credits. In the first two years, affordability credits can only be used to purchase a basic plan. After that, the Commissioner establishes a process to allow them to be used for enhanced and premium plans in a way that makes clear the individuals who select those options will be responsible for any difference in costs. [House tri-committee summary, 11/2/09]
Bill expands Medicaid eligibility. Section 1701 of the bill expands Medicaid eligibility to those with income below 150 percent of the federal poverty level. From the House tri-committee summary:
Sec. 1701. Eligibility for individuals with income below 150 percent of the Federal poverty level.
(a) Requires State Medicaid programs to cover non-disabled, childless adults under age 65 not eligible for Medicare with incomes at or below 150% of FPL ($16,200 per year for an individual). The federal government would pay 100% of the costs of Medicaid coverage for this population in 2013 and 2014, then 91% in 2015 and beyond.
(b) Requires State Medicaid programs to cover children, parents, and individuals with disabilities under age 65 with income at or below 150% of FPL ($33,100 per year for a family of 4). For individuals in these categories with incomes between the levels in effect in the state as of June 16, 2009 and 150% of FPL, the federal government would pay 100% of the costs of Medicaid coverage in 2013 and 2014 and 91% in 2015 and beyond.
(c) Requires State Medicaid programs to cover newborns up to the first 60 days of life who do not otherwise have coverage upon birth. The federal government would pay 100% of the costs of Medicaid coverage for these newborns. [House tri-committee summary, 11/2/09]