Proof of Concept

Since I haven’t gotten any takers on my bets (nor do I expect any), I will share this information with the gambling public, which comes from the House of Representative, via Arnold Kling, via Ezra Klein. Here are the few things I’ve found that pretty well confirm my bets:

The ban on discriminating against pre-existing conditions will prove to place much more pressure on insurance premiums than can be contained by a larger risk pool associated with the “mandate”, which is too small. However, since there will be a large amount of political pressure on “exchanges” to not allow price increases, this will result (overall) in poorer service from individual insurance providers.

From the House:


-Provides eligible individuals access to coverage that does not impose any coverage exclusions for pre‐existing health conditions. This provision ends when Exchanges are operational.

-Bars health insurance companies from imposing pre‐existing condition exclusions on children’s coverage.


-Requires most individuals to obtain acceptable health insurance coverage or pay a penalty of $95 for 2014, $325 for 2015, $695 for 2016 (or, up to 2.5 percent of income in 2016), up to a cap of the national average bronze plan premium. Families will pay half the amount for children, up to a cap of up to a cap of $2,250 per family. After 2016, dollar amounts are indexed. If affordable coverage is not available to an individual, they will not be penalized.

So, instead of supposedly “dealing with” the moral hazard/adverse selection problem (largely created by government, in the first place), this bill severely exacerbates it by baning discrimination immediately, but waiting four years to institute a pathetically weak penalty. I think I’m pretty safe in my wager on this one. Health insurance is going to cost a lot more. Where, pray tell, will insurers extract these rents? Well, since increasing premiums for individuals is out of the question, lest Barack Obama scowl at you…why not raise them on prices that people don’t see? Employers perhaps? Goes along with what I said about insurance poorer quality for a higher price — which I suppose I can twist into saying “same quality, higher price”.


Health Savings Accounts will become a short lived side-note from a seemingly distant past. Not willing to bet on this, yet…because I’ve just read heresay.

From the House:

Limits the amount of contributions to health FSAs to $2,500 per year, indexed by CPI for subsequent years.

This one is kind of confusing. I’m not sure if what is meant is actually “flexible spending account”, which would be different…but since this bill is so heavily tipped in favor of comprehensive insurance over catastrophic, I’ll be willing make the original bet.

— — — —

Also, reading through it strengthens my argument that a “Public Option” will arise within ten years. The bill looks like it was literally designed to begin failing immediately. I honestly can’t understand how Ezra Klein can read through this, smile, and nod in approval…AND be naive enough to simply parrot the CBO data — which we all know will be quickly revised, and I’d be willing to bet not downward.

P.S. Tyler Cowen linked to two articles which say pretty much what I’ve said about the Republican “opposition”. It was completely sickening…and saddening.

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