Tuesday, November 5, 2013

Adverse Selection in Obamacare

As if adverse selection wasn't already a problem for the ACA, techological issues seem to be making it worse. Christopher Weaver and Timothy W. Martin report in today's WSJ:

"But the numbers demonstrate a real-world fallout from the digital snafus: Less-healthy customers are more likely to persevere through technical obstacles to gain coverage, insurers say. Younger, healthier customers who feel less need for insurance—but whose widespread participation is important to the financial success of the system—could be quicker to give up."
 
The succuss of the healthcare act in controlling costs is highly dependent on the healthy signing up more than the unhealthy. It is not looking good. Yesterday my wife's medicine went from $6 to $30. I know this can be due to lots of things, but certainly it could be due to the increase in the percentage of unhealthy individuals signing up for healthcare. I do believe this to be the case and there will only more increases in prices in the future.
 
How Obama and his advisors can honestly claim that they didn't expect this is plain dishonent or just sheer naivete. Of course young Americans were not going to sign up for health insurance. The penalty is way too small, way smaller than health insurance premiums. And the IRS's ability to enforce the penalty for not buying insurance is actually nonexistent per the law itself. I learned from a well-regarded tax accountant this weekend that the IRS is not able to do anything if individual's refuse to pay the penalty. Therefore, it is not a tax obligation in the pure sense; they are able to reduce the amount of refund for those that will receive refunds. Otherwise, they will not be able to enforce the penalty. Period.

Thursday, October 3, 2013

If Increasing Dependence is Considered Success, Then Obamacare is a Winner!

James Taranto of the Wall Street Journal points out how a supposed success story actually moves willing participants in insurance markets to free-ride off fellow Americans. This story is particularly striking:

"Meet Brendan Mahoney, the young man who is saving ObamaCare. He's 30 years old, a third-year law student at the University of Connecticut. He's actually been insured for the past three years--in 2011 and 2012 through a $2,400-a-year school-sponsored health plan, and this year through "a high-deductible, low-premium plan that cost about $39 a month through a UnitedHealthcare subsidiary." But he wanted to see what ObamaCare had to offer.

"He tried logging in to the exchange's website at 8:45 a.m. yesterday, which is impressive in itself. Most young people don't get up that early. "He said the system could not verify his identity." So he called the toll-free help line, whose operator also encountered computer trouble. "But then he logged on a second time, he said, and the system worked."

"Once it got running, it was fast," Mahoney tells the Courant. "It really made my day. It's a lot like TurboTax." He obtained insurance through ObamaCare. Now, he says, "if I get sick, I'll definitely go to the doctor." Even better, if he stays healthy, he won't need to go to a doctor, and his premiums will support chronically ill policyholders on the wrong side of 40.

"So, how much of a premium is strapping young Brendan Mahoney paying to help make ObamaCare work? Oops. The Courant reports that Mahoney "said that by filling out the application online, he discovered he was eligible for Medicaid. So, beginning next year, he won't pay any premium at all."

"So the great success story of ObamaCare's first day is the transformation of a future lawyer who was already paying for insurance into a welfare case."

Friday, September 27, 2013

Jobs of the future

David Autor and David Dorn write about the disappearing jobs of the future. J.J. Feinauer of the Deseret News discusses jobs that may be taken over by robots.

Tuesday, September 24, 2013

Venezuelan Arbitrage

This post by Alex Tabarrok at Marginal Revolution based on a Reuters article shows the problem with exchange rate controls.

Thursday, January 24, 2013

Maybe you can take it with you....But should you

An interesting presentation of hyperinflation in hell (HT: Greg Mankiw).