I've already explained it twice. You are looking at it from a micro-economic standpoint ... if you will. The tax penalty is the carrot/stick in the macro-economic sense to get you to get the guy to insure himself. No penalty for not paying the IRS? What world do you live in? Stick with me: If a person can afford to buy insurance, but doesn't, that implies they have met the income/net worth threshold for it to be required. They will be afforded a tax penalty. If they don't said penalty to the IRS, their wages will be garnished and/or liens placed on assets. Just like if you don't pay any other taxes to the fed gov.