Friday, July 20, 2012

Sticking it to Obamacare?

Reason magazine suggests there may be a way to do so.  It's not very palatable, but when one considers the alternative . . .

Obamacare requires insurers to take all comers and charge them the same rates, regardless of health. Those rules create two problems that reinforce each other: They raise premiums, and they encourage people to delay buying medical coverage until they're sick.

As more healthy people go without insurance, rates rise further to make up the difference, which encourages more people to go without insurance, which increases rates further still. To avoid such a "death spiral," Obamacare commanded young, healthy people to "maintain minimum essential coverage" as defined by the government, thereby subsidizing the medical expenses of older, sicker people.

But in upholding this mandate last month, the Supreme Court said it could not be justified under the Commerce Clause, instead redefining it as an exercise of the tax power. It is perfectly legal to go without the health insurance that Congress thinks you should have, the Court said, as long as you pay the "tax" imposed on people who reject the government's recommendation. That interpretation creates new challenges for Obamacare.

"For most Americans," the Court observed, "the amount due will be far less than the price of insurance."

. . .

Even paying the penalty is effectively optional, because Congress, for political reasons, barred the Internal Revenue Service from using its most effective tools—liens, forfeiture, and prosecution—to collect it. As the Associated Press recently explained, the IRS, confronted by uninsured taxpayers who refuse to pay the penalty, must instead resort to "scary letters and threats to withhold tax refunds."

How effective will those letters be once taxpayers realize the threats are empty? They can even avoid having the money taken out of their refunds by adjusting their withholding or estimated tax payments so that they come out even (or owe a little) at the end of the year. In practice, no refund means no penalty.

There's more at the link.  You may rest assured that I, for one, will be examining this option very closely.  If I can't afford what they want to charge me, and the penalty's substantially less than the charge . . . guess what?



raven said...

This is exactly what it is designed to do- kill the insurance industry, and lead to a single payer system .

SiGraybeard said...

I think that's not a bug, it's a design feature. What will happen will be that insurance companies will either raise rates a lot or go out of business. The more people who do this, the faster the collapse. If people show up with something serious and buy a policy, that's not "insurance" that's "hey you! pay this for me".

When the inevitable collapse of the insurance companies happen, who steps in to set up a true, single-payer, National Health Service? You guessed it, the leviathan.