ObamaCare's Incentive to Drop Insurance (More "unintended consequences?")

The Wall Street Journal ^ | October 21, 2010. | Governor Philip Bredesen (D-TN)

[2ndDivisionVet]

One of the principles of game theory is that you should view the game through your opponent's eyes, not just your own.

This past spring, the Patient Protection and Affordable Care Act (President Obama's health reform) created a system of extensive federal subsidies for the purchase of health insurance through new organizations called "exchanges." The details of these subsidies were painstakingly worked out by members of my own political party to reflect their values: They decided who was to benefit from the subsidies and what was to be purchased with them. They paid a lot of attention to their own strategies, but what I believe they failed to consider properly were the possible strategies of others.

Our federal deficit is already at unsustainable levels, and most Americans understand that we can ill afford another entitlement program that adds substantially to it. But our recent health reform has created a situation where there are strong economic incentives for employers to drop health coverage altogether. The consequence will be to drive many more people than projected—and with them, much greater cost—into the reform's federally subsidized system. This will happen because the subsidies that become available to people purchasing insurance through exchanges are extraordinarily attractive.

In 2014, when these exchanges come into operation, a typical family of four with an annual income of $90,000 and a 45-year-old policy holder qualifies for a federal subsidy of 40% of their health-insurance cost. For that same family with an income of $50,000 (close to the median family income in America), the subsidy is 76% of the cost.

One implication of the magnitude of these subsidies seems clear: For a person starting a business in 2014, it will be logical and responsible simply to plan from the outset never to offer health benefits...

[2ndDivisionVet]

Do these fools think that money comes from a magic pot or grows on trees?

[grobdriver]

Ummmm.... Yes.

[Jim from C-Town]

Yes, They are Democrats, so they are fools.

What came first the stupid or the Democrat?

[expatpat]

Not so foolish. Dropping employer health insurance pushes more and more people into the govt. system, which was their goal.

[maddog55]

[Oldeconomybuyer]

"The consequence will be to drive many more people than projected—and with them, much greater cost—into the reform's federally subsidized system."

Idiots. That's Obama/Pelosi/Reid's intention.

[Former Proud Canadian]

You posted a cartoon. The sad part is, this guy believes it.

[savedbygrace]

IMO, there’s more to it than that.

They needed a plan that would let them increase the income to Medicare and reduce the outgo from Medicare, all without giving voice to the fact that Medicare would soon go paws up without being reformed.

At the same time, they needed a plan to reduce the outgo from the Social Security program before it would go paws up. By reducing the outgo of Medicare, causing many seniors to die without adequate care, they would simultaneously accomplish that, too.

ObamaCare was their answer to both problems.

[BobP]

What came first the stupid or the Democrat?

--------------------------

[GailA]

Listen to Krauthammer on Omamacare impact on the USA, (you have to put up with the commercial)

http://video.foxnews.com/v/4379363/did-obama-mislead-public-on-health-care

[GailA]

BUTT HOLE didn’t say what the increased load on TENNCARE would to do the ‘fragile’ budget of Tennessee!

Although Bill Halsam is a moderate, almost RINO, I’d rather have him than the son of Ned McWherter who gave us TENNCARE.

[expatpat]

Exactly. But the seniors are not going to "go gently into that good night" -- they vote in large numbers.

The interesting issue is how the 50-somethings will react -- the Medicare-SS cutback is aimed at them, because that is where the problem is.

[savedbygrace]

After Progressives won the White House and huge majorities in both houses of Congress, they decided to go All In.

It was kind of like a guy who announces to the table, “Hey everybody, I’ve got such a great hand here that none of you can beat me, so I’m going All In.”

Brilliant pokership, huh?

[Don Corleone]

Do these fools think that money comes from a magic pot or grows on trees?

Obama's stash?

[Emile]

We predicted this long before the bill was passed. It was predictable based on any reasonable interpretation of the bill's provisions.

Now even Democrats are admitting our concerns were legitimate. Doesn't matter, though. Republicans won't have the votes or the courage to repeal this monstrosity. They promise to roll back big government, but never actually do it. We are screwed -- and in for a lot of disillusionment after the election.

Interesting times ahead.