Non-buyers beware

David DeGerolamo is mad, and this past April the 53-year-old North Carolinian decided he wasn't going to take it anymore. Since then the Raleigh resident has scaled back on his small drafting and consulting business and poured himself into his new role as an "unpaid fighter for our country."

The source of DeGerolamo's ire: the federal government. He said Washington, D.C., needs to stop. Stop the bailouts that he blames Republicans for starting. Stop the healthcare overhaul that Democrats are pushing.

When the White House earlier this year set up a "facts are stubborn things" website with an email account asking people to send in any healthcare argument that "seems fishy," DeGerolamo turned himself in for his opposition to the ongoing overhaul efforts. He typed his name in bold letters, font-size 72:

"In the tradition of John Hancock, I'm sending my name so you can read it," he emailed.

Soon DeGerolamo, freshly minted activist, may be turning himself in to federal authorities again for an act that this time could carry a hefty fine and even jail time.

Current healthcare bills include a government order to carry health insurance or face penalties. This unprecedented new individual mandate is a regulation too far for DeGerolamo and scores of others nationwide. In acts of civil disobedience, they are pledging to cancel their insurance and turn themselves in once the mandate becomes law.

"This is not about healthcare," explains DeGerolamo. "This is about power. This is about government control. If the government starts forcing you to buy something, then they are buying your freedom, and that means we are slaves."

Partly to entice support from the insurance industry with the promise of millions of new customers, lawmakers have attached the mandates to their bills. For noncompliance, current proposals levy fines that are either a percentage of income, the cost of an average premium, or capped at a set amount such as the $750 fine. (Insurers are pushing for the higher penalties so millions won't decide that paying the fine is cheaper than buying insurance.)

"Penalties are appropriate for people who try to free ride the system and force others to pay for their health insurance," President Barack Obama recently told ABC News. "Now, what those penalties are, I think they have to be high enough that people don't game the system."

Obama skirted the issue of jail time. But incarceration and larger fines are possible for those who refuse to pay these penalties, according to nonpartisan congressional analysts. In a handwritten note to Sen. John Ensign, R-Nev., Thomas Barthold, chief of staff for the Joint Committee on Taxation, wrote that violators could be charged with a misdemeanor by the Internal Revenue Service and face up to a year in jail or a $25,000 penalty. Those penalties were amended out of one Senate healthcare version.

But, this month, in a formal letter to House Republicans, Barthold wrote that, depending on the level of noncompliance, willful evasion of the House mandate would be con­sidered tax evasion and could lead to a felony charge punishable by a $250,000 fine and up to five years in prison.

The fines will be used to chip away at the $1 trillion cost for reform. The Congressional Budget Office predicts that the fines alone could add as much as $20 billion to federal coffers. "You look inside that bill and you find handcuffs," said Rep. Peter Roskam, R-Ill. "Why is it you need to criminalize people to coax them into a plan? We ought not stand for it."

Those who will not stand for it extend beyond North Carolina activists like DeGerolamo. In the Minneapolis suburbs, Erik Peterson has made an individual choice not to carry health insurance during the economic downturn. He said the decision has saved him about $3,000 this year. While healthy, the 45-year-old Peterson understands he is taking a calculated risk in order to budget more money to pay for food and his mortgage.

He said he would reject government insurance subsidies because he doesn't want to get addicted to them. "Not buying health insurance is not going to hurt anybody else in the system," he said. "I'm not one of those who runs to the ER."

But now he is worried that under the proposed system he would no longer have the freedom to make that choice. "You are not going to stick me in jail because I didn't pay my health insurance," he said. "That's not America."

If the insurance mandate becomes law, Ken Klukowski, a legal expert with the American Civil Rights Union, expects legal challenges to its constitutionality. The Founding Fathers did not intend for the federal government to drop such a regulatory hammer on its private citizens, believes Klukowski.

Supporters cite the "general welfare" clause in the Constitution as validation for a mandate. But Klukowski says that power is limited to federal spending to ensure that funds are doled out for national benefit.

The Constitution also bestows upon Congress the power to regulate commerce-another argument some have used to defend a mandate. But that power is limited by the courts to the regulation of interstate economic activity. To broadly extend that power to include regulating an individual choice would "make a joke out of constitutional government," argues Klukowski.

"There is no court case giving Congress the power to penalize a person who does not voluntarily engage in some act," Klukowski told me. "There is a big difference between regulating action and coercing action."

Other mandate supporters have attached its legality to the Constitution's tax provision. Here again the Constitution limits the power of taxation to include a tax on all citizens, on certain purchases, or on income-but not to tax some individuals as a penalty for not following an order. "Even if it were just a $50 penalty it would still be unconstitutional," Klukowski said. "It is inconsistent with the concept of limited government in a free society."

Law-abiding citizens being forced to buy a product or face a penalty is a concept that did not play well at a recent rally in Raleigh attended by DeGerolamo. He said the talk of civil disobedience percolated among the protestors.

Those in attendance included Joyce Krawiec, 64, of Kernersville, N.C., who joked to me that she didn't protest in the 1960s but is starting to protest in her own 60s. Krawiec runs a small, 21-year-old real estate company. She is worried about how new insurance mandates for employers will impact her business in the midst of an already slow time in the housing market.

She also doesn't want to buy a product that she may not want at a price she can't afford. And she resents the "Washington knows best" mindset that has lawmakers pushing for legislation that would place more of her choices in the hands of federal bureaucrats. "If anything good comes out of this it will cause the American people to wake up and realize what is going on in our country," said Krawiec. "This will really be a test of what kind of America we have become. I think they've gone too far this time."

If healthcare overhaul passes, the new mandates would not go into effect until 2013-after the 2012 elections. Then members of the growing grassroots tea party movement may have something more substantive to throw into the harbor than tea bags: their insurance policies.

Stealth provisions

• The vast majority of spending doesn't kick in until 2013.

• The new federal Health Choices Commissioner will have authority to negotiate private insurers' premiums. "The Commissioner shall deny excessive premiums and premium increases," the bill reads.

• $460 billion in additional revenue will come from higher taxes on those with income over $500,000 and joint filers with income over $1 million-with an additional 5 percent tax hike for that income bracket if Congress allows the capital gains tax to return to 20 percent when the Bush tax level expires in 2011. The Joint Committee on Taxation has estimated that small businesses' income will provide a third of the new tax revenue.

• The bill provides $750 million in federal funding for a new program to offer "knowledge of realistic expectations of age-appropriate child behaviors" and skills for parents to "interact with their child."

• The bill provides veterinary students with up to $283 million in federal scholarship and student loan forgiveness funding.

• The bill requires states to cover incarcerated juveniles after their release if they previously participated in Medicaid "unless and until there is a determination that the individual is no longer eligible."

• The bill requires Medicaid coverage for podiatrists and optometrists-options previously left to states' discretion.

• States must expand Medicaid to families with income at 150 percent of the poverty level, but Congress isn't providing the $34 billion for that expansion.

Price chopper

Health savings accounts would be among the losers if President Obama succeeds in pushing through a nationalization of healthcare. HSAs, as they're generally known, are tax-free funds set up by tax­payers with high-deductible health plans. These consumers can withdraw money to pay medical costs.

Proponents say HSAs provide incentive for consumers to shop for the best healthcare deals: HSAs inject market competitiveness into the provision of medical services by doctors and hospitals and offer flexibility, allowing individuals to carry them from job to job and across state lines. If untapped, HSA accounts grow and roll over year after year, allowing consumers to accumulate savings if they do not need to use the money to pay for healthcare.

John Berlau of the Competitive Enterprise Institute in Washington, D.C., says Obamacare "would kill" HSAs by barring high deductibles and imposing new taxes on them. He says the pending legislation would reduce flexibility, along with "people's health freedom and ways for individuals to better their lives."

The late J. Patrick Rooney pioneered health savings accounts as leader of Indianapolis-based Golden Rule Insurance Co., now part of UnitedHealthOne. Working alongside him until Rooney's death last year was Daniel Perrin, now president of the Washington, D.C.-based HSA Coalition.

Perrin agrees with Berlau that the future of HSAs is grim under any version of nationalized healthcare. "If it passes, they die a slow and painful death," Perrin said. "The people in Congress keep saying, 'We want to make sure [HSAs] don't die a slow and painful death,' but we're not seeing any reason [to believe] they would survive."

Rooney and Perrin co-authored a book, America's Health Care Crisis Solved: Money-Saving Solutions, Coverage for Everyone (2008), published last year. The book anticipated the current debate over healthcare, Perrin said.

"The healthcare debate is about how to ration care," Perrin said. "Democrats believe a government entity or bureaucracy should do the rationing. Pat and I believed individuals should do their own rationing by deciding what they need and what they can afford."

Perrin has heard the oft-repeated line that money should not determine who gets the best healthcare. But money-the cost of healthcare-must be part of the equation, Perrin said. He even believes it's a moral prerogative to keep money issues front and center.

"It's immoral not to have price as a component," Perrin said. "That just drives spending through the roof. We're starting to see unsustainable debt, the loss of the value of the dollar and increased taxes. All those things are coming in part because we have succeeded in creating a system that divorces price from the consideration of healthcare." -William McCleery is an Indiana journalist

Throwing bones to the Blue Dogs

For the last few months, the Democratic leadership has worked fervently to win over enough conservative Democratic votes to pass their healthcare bill-which they did, passing the bill by a five-vote margin. In October, President Obama shot hoops at the White House with nine of the wavering Blue Dog Democrats, and six of them ended up voting for the healthcare bill. Obama made personal phone calls to others on the fence.

Some of House Speaker Nancy Pelosi's major donors, like lobbyist Steve Elmendorf and National Jewish Democratic Council Chairman Marc Stanley, gave small campaign donations to some of the wavering Democrats in August and September as the healthcare debate reached a boiling point. Gifts of $500 or $1,000 are unlikely to sway votes, but those donations don't hurt.

Democratic donors and leadership will still open purse strings to those who voted "no" because many of those Democrats come from historically Republican districts, and Pelosi wants to keep those seats Democratic even if the lawmakers buck the party line regularly.

Eighteen Democrats who voted "yes" on the bill come from districts that John McCain won, districts that are generally driven by a conservative base, not moderate votes. Rep. Tom Perriello, D-Va., is one of the 18 from a McCain district who voted "yes"-he is in his first term and won only 50 percent of the vote in 2008. What made Perriello and others with similar profiles vote for the bill?

The most readily apparent answer is the bill's inclusion of the Stupak amendment, which restricts federal dollars from going to abortions. Fifteen of those from McCain districts who voted for the bill also voted in favor of the Stupak amendment.

Vice President Joe Biden has and will do fundraisers for many of them as well-as he did in mid-November for Rep. Harry Mitchell, D-Ariz., who is from a McCain district but voted "yes." Meanwhile organizations like Moveon.org and Americans United for Change are bathing Perriello and others from conservative districts in glowing ad campaigns about their healthcare vote.