How Obamacare tax credits spike premiums

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For the health insurance industry, Obamacare open enrollment, which started last month, is the most wonderful time of the year. Millions of Americans are signing up for plans on the exchanges. Each click of the “submit” button adds a fistful more dollars to insurers’ bottom line.

Open enrollment comes complete with tax credits for lower-income enrollees. They’re supposed to make monthly premiums more affordable. But their biggest effect is the risk-free enrichment of insurance companies.

The pursuit of profit in a competitive market is the driver of economic growth and innovation. But when government dictates the specifications for the product that can be sold — in this case, the details of insurance coverage — and then effectively guarantees a profit for compliance, the result isn’t competition and better service but entrenched rent-seekers protecting their turf from competitors. The bigger the subsidies for “premiums,” the greater the entrenchment.

Click to read the full article in the Boston Herald.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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