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Critical Condition

NRO’s health-care blog.

Play the Obamacare Lottery



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One of the many, many variables that will impact how Obamacare plays out in practice is the regulation requiring “guaranteed issue” of health insurance to all comers, regardless of preexisting conditions.  Now, this is the equivalent of requiring a property insurer to offer fire insurance to a homeowner after his house has caught fire. 

Democrats’ solution to this problem is to require everyone to carry health insurance or else pay a fine. Leaving aside all of the other problems (constitutional, etc.) with requiring people to buy health insurance, the fine Obamacare imposes is small compared to the potential costs (especially over several years) of paying annual premiums for health insurance that you don’t need. 

Several commentators have noted the problem, but the Political Calculations blog sets up a handy calculator to help people decide how they can win the Obamacare lottery and stick insurance companies with the bill if they get sick:

The new law mandates all individuals in the United States to buy health insurance. To enforce that mandate, the law also imposes a penalty tax for non-compliance, which will be enforced by the IRS. However, since the law also requires health insurers to provide immediate coverage even if an individual has a pre-existing condition, an individual could reasonably choose to drop their insurance coverage, pay the much less expensive tax penalty instead, and pocket the difference as savings until they actually might need coverage, with the insurers compelled by law to provide it on demand.

In a sense, that choice is no different than deciding whether or not to play the lottery based on the odds of winning, with the price of a ticket being represented by the tax penalty and the grand prize being the potential savings and the odds determined by the probability of needing health insurance.

As usual, the law of unintended consequences is in full effect.  Of course, the full consequences won’t play out until well after the next presidential election in 2012.



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