People who are disabled get medicaid and social security disability. The penalties are supposed to be for people who are employed, and making more than some threshold income, with the option to purchase health insurance, who choose not to insure themselves. (There's also penalties for companies that don't subsidize insurance for their employees. It's complicated.) All the penalties go into a fund that the state will use to provide health insurance for poor people -- people who have too much money to be eligible for medicaid, but not enough for the threshold income that would require them to buy their own.

I'm concerned about the complexity of the system. I don't understand all of it, having only read a few newspaper articles about it, but it seems like there's an awful lot of opportunity for fraud and administrative stalling. Even if everyone is perfectly honest and trying really hard to be helpful, increasing complexity tends to increase administrative costs and increase the risk of expensive mistakes.