President Obama said that penalties are appropriate for people who try to free ride the health care system but stopped short of endorsing the threat of jail time for those who refuse to pay a fine for not having insurance.

What I think is appropriate is that in the same way that everybody has to get auto insurance and if you don't, you're subject to some penalty, that in this situation, if you have the ability to buy insurance, it's affordable and you choose not to do so, forcing you and me and everybody else to subsidize you, you know, there's a thousand dollar hidden tax that families all across America are -- are burdened by because of the fact that people don't have health insurance, you know, there's nothing wrong with a penalty.

Under the House bill those who can afford to buy insurance and dont pay a fine. If the refuse to pay that fine theres a threat as with a lot of tax fines of jail time. The Senate removed that provision in the Senate Finance Committee.

Mr. Obama said penalties have to be high enough for people to not game the system, but its also important to not be so punitive that people who are having a hard time find themselves suddenly worse off, thus why hardship exemptions have been built in the legislation.

I think the general broad principle is simply that people who are paying for their health insurance aren't subsidizing folks who simply choose not to until they get sick and then suddenly they expect free health insurance. That's -- that's basic concept of responsibility that I think most Americans abide by, Mr. Obama said, penalties are appropriate for people who try to free ride the system and force others to pay for their health insurance.

The President said that he didnt think the question over the appropriateness of possible jail time is the biggest question the House and Senate are facing right now.

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