Shocked, Shocked: AHIP Caves

Even if the bureaucrats and politicians have incentives to ignore the latter, benefits will have to be paid, and so premiums will have to be sufficient to cover them. So, unlike the case in a normal insurance market, the brave new world created by Obamacare introduces powerful disincentives to scrutinize claims or to avoid cross-subsidies among patient groups. The upshot will be skyrocketing premiums driven by massive adverse selection, combined with strong incentives for individuals to evade the mandate to buy insurance, and powerful political disincentives to enforce the mandate. So much yet again for the promises that premiums will fall, businesses will see lower costs, insureds’ favored coverage policies will remain available, ad infinitum. I am starting to wonder if the constant revelation of surprises lurking in the legislation — the accounting losses reported last week by various firms are only an example — will lead over time to ever-greater cynicism about the bill and about those who voted for it.

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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