Update on Last Week’s House Healthcare Bill Story

Last week we discussed the difficulty of knowing what is and is not in the nearly 2,000 page House Healthcare bill. Here is a really bizarre example. Some commentators noted that the House bill provided for jail time of up to five years for anyone who failed to buy mandated insurance and also did not pay the financial penalty. Reference was also made to sections 7201 and 7203. Some bloggers immediately responded that this was pure fiction– nothing about jail terms were in the bill and there were no bill sections 7201 and 7203.

It is true that you won’t find Sections 7201 and 7203 in the House healthcare bill. End of story? No. When Nancy Pelosi was asked about the jail terms, she did not deny them. What was going on here?  The explanation is as follows. Under the House bill, if you don’t buy the particular insurance policy mandated by the government, there is a financial penalty. The legislative language of the bill quite intentionally describes this financial penalty as a tax. Why is that important? Because under sections 7201 and 7203 of the tax code, you can go to jail for not paying a tax. The sponsors of the House bill thus created a jail penalty for non-payment without having to include this specifically in the bill.
Is this the right interpretation? That question was addressed to the Congressional Tax Committee; the Committee’s written response confirmed it. If you don’t buy the mandated insurance and you don’t pay the tax, you can be put it jail for up to five years. Supporters of the bill still claim that in this case you won’t be jailed for not buying the policy. You will be jailed for not paying a tax. Perhaps we can all agree on this language–not buying mandated insurance can lead to jail. And that is exactly what Nancy Pelosi intended.