Health official urges higher penalty for uninsured

By Alice Dembner, Globe Staff

The penalties for Massachusetts residents who do not obtain health insurance this year have been set too low to encourage people to buy insurance, a member of an influential state panel said today.

"The mandate has to be enforced," said Jonathan Gruber, a director of the Commonwealth Health Insurance Connector, which oversees implementation of the state’s health insurance initiative. “We need to think beyond what looks mean and do what’s right.”

Last week, the Patrick administration proposed a schedule of penalties starting at $17.50 a month for those at the lowest incomes and climbing to $76 a month for those with at least moderate incomes. They based the schedule on state law that requires every adult to have insurance or pay a penalty of up to half the cost of the least-expensive insurance premium.

The penalties will be finalized after a public comment period that ends Tuesday. They will be imposed in 2009 when individuals file their 2008 tax returns.

At a connector board meeting today, Gruber -- an MIT economist -- and one other board member questioned the proposed penalties, while four others spoke in support.

"This imposes a significant penalty but it's not overly punitive," said Nancy Turnbull, an associate dean at the Harvard School of Public Health.

Leslie Kirwan, the connector chairwoman and state secretary of administration and finance, said her staff had worked hard to strike a balance in setting penalties that would withstand challenges to their legality and fairness. She said the top penalty, which amounts to $912 a year, is a big jump from the $219 that people who were uninsured last year are facing now as they file their 2007 tax returns.

Healthcare advocates, some lawmakers and some board members had previously suggested that imposing the letter of the law would have created an unwieldy schedule with as many as 27 different penalties depending on an individual's age, income and hometown. Many had suggested that a 50 percent penalty would unfairly penalize older people, who are charged twice as much as young people for insurance.

Gruber said the penalty would be less than 40 percent of the insurance cost for many young people and that for those over 60, the top proposed penalty is only 20 percent of the cost of insurance. "The legislature's intent was not to vary the penalties that way," he said.

Senate President Therese Murray said through a spokeswoman today that she supports the proposed penalties and believes they are large enough to encourage people to sign up for insurance. She had previously said that she preferred penalties that were not driven by age or where people live.

House Speaker Salvatore DiMasi declined comment through a spokesman.

Under the law, people for whom the state determines insurance is unaffordable do not have to pay the penalty. State tax forms this year include tables to help people without insurance determine if they are subject to the penalty. In addition, people can use the tax form to request a waiver of the penalty if they believe they have extenuating circumstances.