Surprise! ObamaCare Has Unintended Consequences

Of course it does. Every liberal policy has unintended consequences. That’s why it’s a law.

The other headline I was contemplating for this post was “WaPo: Hey, those individual mandate fines are way too low bro.” That would have been somewhat misleading, as the article is written by Martin Feldstein and he doesn’t actually suggest the need for higher fines. But the unavoidable conclusion from the facts he posits in the article is that once people figure out how best to avoid the higher premiums inevitably caused by ObamaCare, one of the 111 new bureaucracies invented under ObamaCare will have to consistently raise the fines for failing to insure until they’re at a level that makes it a real penalty for not insuring.

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.

In an attempt to prevent this, the draft legislation provides penalties for individuals who choose not to buy insurance and for employers that do not offer health insurance. But the levels of these fines are generally too low to cause a rational individual to insure.

Feldstein goes on to explain how families and individuals in most situations will find it far more financially sound to forego insurance coverage and pay the fine than do the reverse. How long do you think it will take before Congress realizes this and starts making the penalties really hurt?

Consider: 27 million people are covered by health insurance purchased directly, i.e. outside employer-based plans. The average cost of an insurance policy with family coverage in 2009 is $13,375. A married couple with a median family income of $75,000 who choose not to insure would be subject to a fine of 2.5 percent of that $75,000, or $1,875. So the family would save a net $11,500 by not insuring. If a serious illness occurs — a chronic condition or a condition that requires surgery — they could then buy insurance. Since fewer than one family in four has annual health-care costs that exceed $10,000, the decision to drop coverage looks like a good bet. For a lower-income family, the fine is smaller, and the incentive to be uninsured is even greater.

So, ObamaCare will cause untold numbers of individuals and families to drop their insurance and pay the fine in order to put the money back in their pockets. Less insured and higher insurance premiums; this will inevitably be the legacy of ObamaCare, at least until we start seeing people go to jail for refusing to buy coverage, which we will.

Couple this with the Examiner editorial today:

That American citizens should be fined or even put in federal prison for refusing to purchase government-approved health insurance is as un-American as any idea we can imagine. But such a mandate is the very heart of the bill written behind closed doors by House Speaker Nancy Pelosi and her privileged pals. If their bill is approved by the House tomorrow, we will be a big step closer to the day when everybody gets their health care insurance through the government or from an approved insurer offering policies that meet meticulously detailed specifications contained in thousands of pages of federal regulations.

The Law of Unintended Consequences is as consistent as gravity. The reason is because supply and demand and the laws of human nature are also as consistent as gravity. Who in their right mind would buy insurance at 10 grand a year knowing that they can buy insurance in the event a catastrophic event occurs when they can save the 10 grand and pay a thousand dollar fine? Nobody.

But liberals, as we know, are never in their right mind.