ACA: What Happens If You Don't Get Insurance, Pay The Penalty Tax, And Then Get Sick?

[Latichever]

8. Usage of penalty tax

I've read that the penalty tax can't exceed the premium of an insurance plan at the Bronze level. So it's somewhat tied to insurance coverage costs.

But where does that money go? I can't find a specific answer. Does it go into the general Treasury? Or is it designated for a fund that will go to supporting the costs of penalty payers who get sick and buy insurance?

I'd be interested in seeing actuarial predictions of who will go with the penalty with projections of the costs of covering their illnesses.

If the uninsured tax does go into a special health care fund rather than the general Treasury, then it's kind of a public option.

And incremental reform of the ACA would, of course, be: if you don't buy insurance, you pay the tax and that money is used to automatically enroll you in an insurance plan. (Could be a private plan or, better a public option.) Doesn't Massachusetts do automatic enrollment?

Of course, the politics of this happening soon are nil, but we have planted the flag.

When Social Security was enacted, it had to survive court challenges, and it was a much more bare bones program than today.