The House passed the Health Care reform bill, but with an anti-abortion amendment that would prevent the public option or insurance companies that get federal subsidies from paying for abortions. Now the bill goes to the Senate, which can also make changes, whereupon wheeling and dealing will take place to reconcile the bills.
Harvard economist Martin Feldstein explains that the health care bill may well do the opposite of what it was intended to do, sending insurance costs soaring while actually cutting down the number of people with health insurance:
Obamacare could have the unintended consequence of raising health insurance premiums and causing a decline in the number of people with insurance.
Here's why: A key feature of the House and Senate health bills would prevent insurance companies from denying coverage to anyone with preexisting conditions. The new coverage would start immediately, and the premium could not reflect the individual's health condition.
This well-intentioned feature would provide a strong incentive for someone who is healthy to drop his or her health insurance, saving the substantial premium costs. After all, if serious illness hit this person or a family member, he could immediately obtain coverage. As healthy individuals decline coverage in this way, insurance companies would come to have a sicker population. The higher cost of insuring that group would force insurers to raise their premiums. (Separate accident policies might develop to deal with the risk of high-cost care after accidents when there is insufficient time to buy insurance.)
The higher premium level would cause others who are currently insured to drop coverage, pushing premiums even higher. The result would be a spiral of rising premiums and shrinking numbers of insured.
Yes, the bill includes financial penalties for not getting health insurance, but Dr. Feldstein shows how the amount is so small that a rational person would be way ahead just paying the fine and not buying insurance until actually getting sick.
The other detail here surprised me: Not only may an insurance company not deny anyone coverage for a pre-existing condition, but “the premium cannot reflect the individual’s health condition”? How can that be financially feasible?
UPDATE: Well, here is one way around this problem that Democrats are proposing, the way of Dracon, the Greek lawmaker and patron of harsh punishment. Maybe throwing people who don’t buy insurance into prison for five years
will get them to buy health insurance:
Today, Ranking Member of the House Ways and Means Committee Dave Camp (R-MI) released a letter from the non-partisan Joint Committee on Taxation (JCT) confirming that the failure to comply with the individual mandate to buy health insurance contained in the Pelosi health care bill (H.R. 3962, as amended) could land people in jail. The JCT letter makes clear that Americans who do not maintain “acceptable health insurance coverage” and who choose not to pay the bill’s new individual mandate tax (generally 2.5% of income), are subject to numerous civil and criminal penalties, including criminal fines of up to $250,000 and imprisonment of up to five years.
I’m not sure if these penalties made it into the bill that passed. Does anyone know?
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