Obamacare's Failure To Enroll the Young Gets Health Insurers Downgraded* by Moody's

Healthcare.govU.S. GovernmentThe viability of the Affordable Care Act—Obamacare—is premised on getting young, healthy people to pay way too much for their health care in order to subsidize coverage for older, sicker people. Unfortunately for the scheme, young, healthy people have turned out to be less gullible than anticipated. They're enrolling in underwhelming numbers after discovering that it's cheaper to pay a penalty than to get milked by the government. The likely result is financial woes for health insurers tasked with making Obamacare's impossible numbers work—which has led to a thumbs-down on the industry by Moody's.

According to a Moody's press release:

Uncertainty over the demographics of those enrolling in individual products through the exchanges is a key factor in Moody's outlook change, says the rating agency. Enrollment statistics show that only 24% of enrollees so far are aged 18-34, a critical group in ensuring that lower claim costs subsidize the higher claim costs of less healthy, older individuals. This is well short of the original 40% target based on the proportion of eligible people in this cohort, says Moody's.

The ratings agency also cited regulatory uncertainty and tax issues among the reasons it "changed the outlook for US health insurers to negative from stable." The overall effect is a vote of no confidence in the economic sustainability of the Affordable Care Act, and in the industry which once thought it hit the jackpot with a law that ordered Americans to buy its products, but now discovers (as so many have before) that government is an unreliable business partner.

Earlier this week, the conservative American Action Forum released a report which found "that after accounting for subsidies and cost-sharing, 6 out of 7 uninsured, young adult households will find it financially advantageous to forego health coverage, and instead pay the mandate penalty and cover their own health care costs. As the penalty increases, that number will drop from 86 percent in 2014 to 71 percent in 2015 and 62 percent in 2016, before ticking back up to 66 percent in 2019."

Economic incentives. So politically inconvenient.

*A reader points out that there's a difference between a negative outlook and a formal downgrade, which is what I originally implied. A credit downgrade is likely, but has not yet occurred.

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  • John||

    And we can expect a federal investigation and indictments of Moody's when? Before November for sure.

  • Idle Hands||

    Hey, now that would be a politically motivated attack, and Obama is the most honest/transparent leader the world has ever seen. President Obama isn't familiar of the details the S&P case and is only now hearing about the vaguerities of the indictment like the rest of us and will promptly look into it. A national conversation is forthcoming. /White House press release

  • John||

    And the AUSA in New York doesn't have anything more important to do than worry about if the guy who happened to make a film critical of Obama may have illegally given $20K to some failed Senate campaign. That is the most important and pressing corruption issue in the entire Southern District of New York. The fact that it happens to be a public critic of Obama is just a happy coincidence.

  • Idle Hands||

    Pay no attention to how similar the Mcdonnell scandal is to the Rezko one sans the federal indictment. Obama has never met Mr. Rezko personally.

  • John||

    And to the fact that it is against the law to accept campaign donations without verifying their source and the Obama campaign turned off the credit card verification software on its website. That was innocent oversight. Collecting hundreds of millions of dollars from completely unknown sources is nothing compared to giving 20K to a Senate campaign. Only a racist couldn't see that.

  • OneOut||

    No one is more frustrated by this than the President. Period.

  • Rich||

    Period.

    FTYF

  • Rich||

    *FTFY*

    Gack.

  • Ska||

    FTYF

    Fixed that you fuck.

  • Swiss Servator, Befehl!||

    +1

  • Sevo||

    "A national conversation is forthcoming."
    At 5PM the 12/24/14

  • some guy||

    They don't even have to go that far. They could just threaten to remove Moody's status as a NRSRO and stop using their ratings for regulatory decisions.

  • John||

    Threaten is just a nasty, patriarchal word. I believe the proper term is extortion.

  • The Last American Hero||

    Actually, I think they use the term "nudge".

  • Sevo||

    No one is "threatening" anyone. Why would you use such hateful language?
    We're here to help you. You see, you're just looking at it from the wrong direction, focusing in the negative instead of the positive!
    Of course we really do want your cooperation and we can be of a great help to you if you do cooperate. You understand our meaning, I'm sure.

  • Rich||

    Moreover, why would you not want to help yourself? That would be insanity.

  • Smilin' Joe Fission||

    +1 Atlas Shrugged

  • John||

    You mean passing mandates that make a product unaffordable and a terrible deal for many people might make fewer people buy that product? Who could have seen that coming.

    Next up the Kenyan Village idiot saves the auto industry by mandating that every new car sold in America includes a 500 horsepower engine and a boat trailer as standard equipment.

  • ||

    a 500 horsepower electric engine

  • John||

    With a 40 mile range that takes 12 hours to charge. All for $100,000. If you don't want that, it is because you are too stupid to understand that Honda you are driving isn't a real car. It is just a ponzi scheme.

  • Brett L||

    I'll just bolt a 375 kW (500 hp) electrical generator that just happens to run on diesel to the back of my car. Charges in minutes, great range.

  • JW||

    It's been done.

  • itsnotmeitsyou||

    That's awesome. A friend of mine did a project like that with a Corvette while he was in school. They were given the task of taking a standard Corvette and convert it to run on electric motors. They basically just removed the drivetrain and replaced it with electric motors that hooked up to some serious alternators and batteries. (I think part of the specifications were that it had to get power from batteries) The result was a corvette whose engine was just a generator providing power to the batteries who provided power to the motors.

    The car launched like a rocket. It smoked the stock Corvette in a quarter mile.

  • Brett L||

    Yeah, electric motors are all torque, and when they are physically turning the wheels, you only have to worry about friction since there's no real axle or drive shaft to twist up.

  • JW||

    That clip skipped the part where the boys actually put a diesel engine in it for that very reason. They nearly asphyxiated.

  • JW||

    I've long wondered why they don't make a diesel-electric car. being a non-engineer blithering idiot, it seems like a great idea and you can do away with the pesky batteries.

    I'm told by learned people that the energy transfer is very inefficient, but I think they're neglecting the 4th law of thermodynamics, which stresses the brilliance of my idea.

  • Smilin' Joe Fission||

    You should patent that idea Brett

  • Fist of Etiquette||

    ...the industry which once thought it hit the jackpot with a law that ordered Americans to buy its products, but now discovers (as so many have before) that government is an unreliable business partner.

    With the heavy regulations on the insurance industry, they had the government as a partner. But maybe this will be a lesson to other businesses to stick to donating to campaigns to steer federal bureaucracies to put your rivals at a disadvantage and don't try to write comprehensive legislation to force business your way.

  • Rich||

  • Sevo||

    Pathetic.
    Lenin would blush.

  • John||

    This is how they always start out. Come on, lets everyone get together and do our patriotic duty and fix this. When that doesn't work it is always because someone didn't do their duty. And that is when the guns come out.

    This movie always has the same ending.

  • Jordan||

  • Aresen||

    I find it hard to believe that this is an unintended consequence.

  • Rich||

    Especially since Obama is so in tune, in synch, tight with the youngsters!

  • ||

    No shit Aresen.
    I a fairly certain all is going according to their plan.

  • Ken Shultz||

    I hate to say I told you so, but...

    http://www.youtube.com/watch?v=Uz1Jwyxd4tE

    Well, actually, I love to say I told you so! This is exactly what I was talking about.

    Watch the earnings calendar for UNH, should be sometime around April 15, 2014 for Q1--the first time they post earnings.

    I'm not saying that will be the end of ObamaCare, but this will be the first time they report earnings after serving all those people with pre-existing conditions--and not getting healthy kids paying into the system.

    Even when the government backstops them, Wall Street gives a different multiple to companies that need government assistance to break even. Earnings is where the rubber meets the road--where the ObamaCare fantasy checks in with reality.

  • John||

    They are going to bankrupt the insurance industry. And the bailout is from what I understand already written into the law. We are going to have another TARP. Train wreck is too weak and overused of a adjective for this. We need a new word.

  • Rich||

    At least it's not gonna be this bad.

  • some guy||

    The exchange market is too small to bankrupt the insurance industry in a couple of years. All that will happen is these companies will pull out of the exchanges, but stay profitable on the employer-provided side of things, which is where most of their business is to start with. And eventually the employer mandate should go into effect, helping business even more.

  • John||

    But there is more to the "employee mandate" than just you have to give insurance. With the mandate comes all of the bullshit must cover rules that have destroyed the individual market. Once the employee mandate kicks in, millions of employers will no longer be able to afford to provide health insurance and thus drop it. And those that do will pass the cost on to their customers and employees in the form of higher prices and lower salaries.

    The rules are going to price millions of people out of the market just like they are now with the individual market. It is like I said above, Obamacare is making insurance completely unaffordable and unattractive by law.

  • some guy||

    Employers have the ability to spread their new costs out over both employees and customers. They also face stiffer penalties for non-compliance. The employer mandate will certainly hurt the economy badly, but I don't think it will have the same problems as the individual market.

  • John||

    Some employers will eat it. But a large number of them will just cut their employees hours to under 30. The bottom line is that Obamacare is going to price a huge number of workers out of the health insurance market. That is going to make health insurance a much smaller market and squeeze out a good number or maybe all of the companies who do it.

    On top of that, to the extent the mandates don't destroy coverage, companies will pass along the cost of mandates by just providing less care under their policies.

  • Sevo||

    John|1.24.14 @ 11:55AM|#
    "Some employers will eat it...."

    Google, perhaps; it'll take a company returning far more that the normal 7% to eat it.
    Some portion will fold the tent.

  • John||

    A good portion Sevo. Look at how bad things have been with the individual mandate. Then realize, Obama waived the employee mandate. How horrible and obvious must the effects of that mandate be for dumb ass to waive it?

  • OneOut||

    If the employer mandate didn't promise, at at a minimum, just as much disruption as the individual mandate it would not have been delayed for a year in the first place.

  • John||

    Exactly OneOut. My guess is that it will be exponentially even worse.

  • Ken Shultz||

    "All that will happen is these companies will pull out of the exchanges, but stay profitable on the employer-provided side of things"

    It isn't just the exchanges. The exchanges are just demonstrating part of the problem.

    The real problem is Medicaid and Medicare. ObamaCare should be properly seen as an attempt to save the insurance company from all the gouging they're forced to accept from all the money providers lose by treating Medicare and Medicaid patients.

    They wanted to remedy that by forcing young healthy people to pay into the system--because they don't consume hardly any healthcare. Their mandate wasn't strong enough to make that happen. So it's not only that the insurance companies aren't making money off the exchanges--they're not making up for all new Medicaid patients, and all the people with preexisting conditions, the latter of which start consuming services from day one.

    In other words, in addition to the problems they already had, ObamaCare has added much, much more. ObamaCare was supposed to solve those problems, but it actually made things much, much worse for the insurers.

  • creech||

    No, what will happen is that a number of fiscally responsible Republicans will start demanding higher penalties on young people who don't sign up so taxpayers won't have to subsidize the insurance companies. And the Democrats will use "cruel Republicans" as political capital to get even more young votes. I think we all know where this is going to end: Medicare for all.

  • Ken Shultz||

    "No, what will happen is that a number of fiscally responsible Republicans will start demanding higher penalties on young people who don't sign up so taxpayers won't have to subsidize the insurance companies."

    I don't think that call is going to come from the Republicans. Not with the brawl going on with the Tea Party. That solution is a non-starter over there.

    You might see that call come from the Progressives in the Democrat Party, but you're gonna do that in an election year? The individual mandate is already unpopular--you're gonna double down on that and jack the rate up so high that it's painful in an election year?

    I don't think they have the political clout to get something like that passed. The only reason it made it through as is ? ...it's because it was so low.

    I'd like to see the Democrats overplay their hand that way, though. I just don't think they're that stupid--not with a president who's starting to quack like a duck.

  • John||

    I just don't think they're that stupid-

    A good portion of the Dems seem to have gone full retard over the last five years. You would not think they would be that stupid. But I wouldn't be surprised if they are. They were dumb enough to pass it in the first place weren't they?

  • Ken Shultz||

    That's the way it happens.

    It's like the Republicans with neoconservatism.

    Everybody thinks they have a mandate--right up until people start laughing them for overplaying their hand.

    It's like the Peter Principle applied to politics. Everybody rises to their own level of incompetence, and when reality asserts itself on ObamaCare, those Democrats will have reached theirs.

    And a lot of them know! Obama didn't orchestrate this stuff to start happening after his next election for no reason. And they've been resentful of us calling it "ObamaCare" all along.

  • Pelosi's Rabbit||

    The penalties are already set to increase in the next couple of years.

  • Ken Shultz||

    It will be like TARP from the public's perspective--in that they don't want to bail out demonized insurance companies much more than they want to bail out demonized investment banks.

    On the other hand, this is gonna be a little different in that the main victims of this aren't going to be asking for more government involvement as a solution...

    Don't get me wrong: many of the investment banks were forced to participate in TARP against their will, too, but the AIGs and Fannies were lovin' it.

    That's not gonna be the case with this. If ObamaCare is breaking the shareholders, those insurers aren't going to be lining up behind the president to regulate them more.

    They're going to be looking for a way out of ObamaCare. They'll want a way out of pre-existing conditions exclusion, and, meanwhile, the massively unpopular individual mandate will be exposed as feckless. Why keep that around?

    When I first posted this video months, ago, I thought it might be instructive as to what the future has to hold. Who knew how thoroughly accurate the predictions it contained would be?

    http://www.youtube.com/watch?v=yFeWw2YFXlM

    It may take a while yet for these this to all play out, but one of the best reasons to advocate for free markets is because the kinds of central planning solutions Obama advocates are doomed to failure over the long haul.

    What an idiot Obama is! What a shame that so many people are going to be hurt by his arrogance and stupidity.

  • John||

    Obama is a profoundly ignorant and short sighted man. And I agree with you.

    The bottom line is that Obamacare, by mandating the things you list, makes health insurance unaffordable and destroys the health insurance industry's economic viability. You could bail out the bank via TARP because despite the crash, it was still possible to make money as a bank going forward. But with Obamacare, bailing out the insurance industry won't help unless you get rid of Obamacare. Either Obamcare goes or health insurance goes.

    When it comes down to it, the voters of this country are not going to do without health insurance or agree to single payer. I don't care how badly the Progs want it or various right wing people tell me that America will demand single payer after seeing the government fuck this up. Obamacare will go. And in fact, the more I see various media hacks say "sure it is unpopular but repealing it is not an option" the more I think repeal is going to happen, since those people always say the exact opposite of the truth.

  • Rich||

    Well said.

  • ||

    "What an idiot Obama is! What a shame that so many people are going to be hurt by his arrogance and stupidity."

    How many of those hurt are geniuses who voted for the Fuckwit in Chief? I agree with what you said but I exclude them from the shame part.

  • Ayn Random Variation||

    But the Insurance bailout will save or create millions of jobs.

  • Ken Shultz||

    Thank you, Dr. Krugnuts.

  • The Last American Hero||

    Your Wall Street multiple theory doesn't seem to apply to Tesla.

  • Ken Shultz||

    I think investors are hoping that Tesla is a huge growth story. Even if they don't become as big as GM someday, investors are hoping their technology will be viable to license. And they MIGHT becomes as big as GM someday!

    Health insurance isn't a growth story like that. Health insurance isn't a new technology that may sweep their rest of their competitors aside and take over an established industry. They're about as old school as it gets.

    The entrepreneurial use of technology came to health insurance by way of Ross Perot and EDS in the 1960s. That's a mature development. That ship's already sailed. Tesla's just now trying to leave the port.

  • Sevo||

    How 'bout some related O-care news?
    In spite of the fact that the intent of O-care was to win votes, even that degree of dishonesty doesn't adequately describe the entire mess; the pitch was to provide increased medical *insurance*!
    Well, insurance be damned. If Obo were less of a lying, cynical bastard, he might have pitched improving medical CARE.
    Well, O-care seems to be failing in its actual aim, and it's doubtful it will succeed in its stated aim, and it sure as hell is failing in the aim promised by innuendo:
    Got insurance now? Great! Good luck finding a doc, sucker!
    "Covered California clients have trouble finding doctors"
    [...]
    "Think signing up for health insurance through Covered California is hard? Some consumers say the real battle starts when it comes to finding a doctor or hospital that will take a plan purchased through the state-run health exchange."

    Yes, all you CA voters who live the the Dem rear pocket, well, I hope you end up on a waiting list long enough to make a Canuck sick!
    http://www.sfgate.com/health/a.....169944.php

  • some guy||

    That little "market failure" can only be fixed by nationalizing the providers. For the children.

  • Raston Bot||

    Absolutely disgusting, if the insurers have to take preexisting conditions, make the doctors and hospitals accept the insurance and make it illegal for the insurance company to pay less than a normal plan. This whole thing has been managed so poorly, I think we are being driven to single payer.

    what?

  • Sevo||

    There is no gov't program so disastrous that a proggy can't suggest one more to "fix" it.

  • ||

    Let me rephrase that Raston so it is easier to follow. What they are saying can be summed up in two words; Enslave doctors.

  • Sevo||

    "Enslave doctors."
    And I can only hope that the ones playing Economist, standing in their white robes behind Obo, are the first to be handed papers explaining when and for how much they WILL work.

  • R C Dean||

    make the doctors and hospitals accept the insurance

    And, if a provider HAS to accept whatever the insurer offers to pay, just what incentive do the insurers have to negotiate rates, or pay anything remotely approaching an adequate rate?

    Oh, the insurer has to pay as much as a "normal" plan? So, the State is going to be setting the rates that providers get paid?

    That'll work out well. Basically, single payer, with maximum cronyism. Wonderful.

  • paranoid android||

    Thus it will be marketed as a "common-sense, moderate, market-based reform"

  • Dave Krueger||

    I wonder if Moody's is preparing for the inevitable retaliation.

  • Raston Bot||

    Good. This could not have happened to a nicer group of rent seekers.

  • Jordan||

    The overall effect is a vote of no confidence in the economic sustainability of the Affordable Care Act, and in the industry which once thought it hit the jackpot with a law that ordered Americans to buy its products, but now discovers (as so many have before) that government is an unreliable business partner.

    HAHA!

    /Nelson Muntz

  • itsnotmeitsyou||

    You know, a lot of proggies SHOULD feel really stupid right now. Should being the operative word.

    It baffles me. I still (just today) saw a proggie going on about how the low "young invincibles" enrollment doesn't really make a difference because... intentions. Seriously, this moron was trying to argue that because the law had good intentions, it is a whopping success. When I linked to several videos/stories/etc about the administration and Pro-0Care people talking about how the mix was one of the most important metrics, they said I was twisting the context of what they were saying.

    I really just don't know how to process this crap. Their indoctrination is so strong that even when people on their side start bringing up potential issues with the law, the cognitive dissonance is so powerful they have to make shit up about the people contradicting them to keep their heads from exploding.

    I'm sure this will be no different. All of a sudden, Moody's will become the newest wing of the Rethuglican Party and are obviously just racist obstructionists.

  • Rich||

    Their indoctrination is so strong that even when people on their side start bringing up potential issues with the law, the cognitive dissonance is so powerful they have to make shit up about the people contradicting them to keep their heads from exploding.

    It is truly incredible.

    I halfway expect them to say stuff like: "Well, I *intended* to get an advanced engineering degree, so I *deserve* that high-paying job."

  • John||

    I think of a lot of it is that they were never taught critical thinking. They lack the basic reasoning skills necessary to make tough judgements.

    I know a fair number of young people who when you talk to them are developing a really healthy dislike for the federal government and distrust of government solutions. You would think that would be a good thing. But they can't make the leap necessary to either demand change in the Democratic Party or leave and vote Libertarian or Republican. The reason is that they are so hung up on Kulture War bullshit that they can't think strategically. Basically they are so terrified of anyone thinking of them as a bigot or a racist, they will keep voting Democrat even if doing so ruins their future and bankrupts the country.

  • Rich||

    I think of a lot of it is that they were never taught critical thinking.

    Were you and I *taught* critical thinking?

  • John||

    Yes. We kind of were. I don't think it comes naturally to people necessarily. If you spend 12 or more years in school being told that how you feel and your emotions are more important than the facts, there is a decent chance you will never learn how to reason.

  • Rich||

    That's about how I see it. You and I were fortunate enough to live our formative years before such, um, "noncritical thinking" was taught.

  • John||

    And I had a father and a mother who were pretty straight forward and brutal in their arguments. I was never patronized as a child or allowed to believe unreasoned things without being challenged. I think a lot of people have grown up with parents whose number one goal making sure their kid had good self esteem. You will never learn or get any better at something if the adults around you are afraid to point out where you are wrong.

  • Rich||

    This, too.

  • Irish||

    I lived my formative years after 'noncritical thinking' started being taught, but my parents happened to not be moronic progressives.

    The indoctrination of American schools is only an issue to people who are already idiots and come from a family of idiots and therefore have no counterbalance.

  • Lord Humungus||

    My old man was a straight zero BS, results orientated business man. Nothing else mattered than getting the job done, and doing it right.

    And having an interest in science + math, along with working electronics teaches you that 500 volts doesn't give a shit where you went to college. If you don't know what you're doing, you'll get shocked.

  • sarcasmic||

    I once felt as they do. Now I think.

  • Root Boy||

    This seems relevant:

    http://hotair.com/archives/201.....e-kronies/

    Show this to your kids..and get them the action figures

  • ||

    You were -- if your teachers taught the subjects they were supposed to teach and skipped the indoctrination aspects of 'education'.

  • itsnotmeitsyou||

    I can't speak for anyone else, but I was taught critical thinking skills. Not by any government organization, mind you, but by my father and the people around me.

    John, I've met so many people that when they talk about government (lately), they are echoing libertarian principles as clearly as though they had just been reading Bastiat, yet these are the same people that will tell me that libertarians are "anti-reality". They are so convinced that every scary story they've heard about libertarianism is 100% true that if I were to point out the logical conclusion to their own words, they would probably purge those thoughts from their mind.

    Unfortunately, it's one of those "you can lead a horse to water" situations. All I can do is try to encourage that type of thinking and hope that the dissonance will eventually lead them to realize that their party is no better than the one they call "evil". This is my hope, as unlikely as it is.

  • Irish||

    They are so convinced that every scary story they've heard about libertarianism is 100% true that if I were to point out the logical conclusion to their own words, they would probably purge those thoughts from their mind.

    “Doublethink means the power of holding two contradictory beliefs in one's mind simultaneously, and accepting both of them.”

  • John||

    The Progs have so effectively used media and culture that they have a good number of people convinced that the only way to show the world you are not a racist or intolerant (the last two sins our puritanical society will judge anyone for) is to be a committed Democrat. At some point that dam will break. People look around and realize that they are not the only ones who think this is bullshit and that not everyone can be racist and intolerant. But when it breaks is hard to tell. It may get worse before it gets better.

  • Irish||

    But when if it breaks is hard to tell. It may get worse before it and never gets better.
  • John||

    The dam always breaks.

  • R C Dean||

    Basically they are so terrified of anyone thinking of them as a bigot or a racist, they will keep voting Democrat even if doing so ruins their future and bankrupts the country.

    Representing the ultimate triumph of Obama's fundamentally divisive strategy.

  • sarcasmic||

    Their indoctrination is so strong that even when people on their side start bringing up potential issues with the law, the cognitive dissonance is so powerful they have to make shit up about the people contradicting them to keep their heads from exploding.

    It's all about intentions. Universal health care is well-intentioned. I mean, who doesn't support health care for all? I'll tell you who. People with bad intentions! People who want the poor to die! If you don't support universal health care, the only explanation is bad intentions! I mean, what other explanation is there?

  • John||

    They do eventually figure it out. It just takes a while. If they didn't, leftist governments wouldn't have to always fix elections and resort to the gun. And they always resort to the gun and fixing elections. They don't do that because their policies' failure just cause people to love them more.

  • sarcasmic||

    By the time they figure it out, it's always too late.

  • John||

    No its not. Leftist have been kicked out of lots of countries. The only place they stay is places where they are able to take over the Army and disarm the populace.

    You give these people way too much credit. They are retarded goons. They are not supermen. You should stop feeling sorry for yourself so much.

  • Irish||

    You give these people way too much credit. They are retarded goons. They are not supermen. You should stop feeling sorry for yourself so much.

    If the public also consists primarily of retarded goons, there's no reason they can't continue electing such people.

  • sarcasmic||

    Feeling sorry for myself? Really? Go fuck yourself, John. Seriously.

  • OneOut||

    "because the law had good intentions, it is a whopping success."

    The neocons had good intentions in Iraq also.

  • amelia||

    I shouldn't have to pay the fine because I'm old with pre-existing conditions and would be bad for the bottom line anyway.

  • Ayn Random Variation||

    The myth of the $95 penaltax needs to be debunked early and often and loud. $95 is just the minimum for a single person making less than 19.5K. Then it goes up every year.
    This is one of many things that people will be surprised about come tax time.

    http://www.forbes.com/sites/be.....insurance/

  • Rich||

    Yep. As Democratcare piles on, the screaming will increase.

  • Ken Shultz||

    The point is that it's insufficient to make young people spend more than a thousand dollars a year on health insurance they probably won't use.

    And these things are time sensitive. The insurers need to stay profitable now. Not be profitable five years from now.

    And, by the way, if and when the mandate becomes big enough that it forces a sufficient number of consumers to change their behavior, I'm not convinced voters would tolerate it.

    Even the ObamaCare supporters I talk to who think I'm being an alarmist--and didn't know about or understand the individual mandate--said they would just pay the penaltax. ...but being supporters of ObamaCare, they didn't seem to understand that the success of ObamaCare requires them to actually buy insurance--not to pay the penaltax.

    The whole house of cards depends on voters in a democracy being forced to buy something they probably don't need. The only reason that made sense when it passed was because low information voters thought the Republicans hated gays and immigrants and that Sarah Palin was a witch in high school, who thought she could see Russia from her backyard in Minnesota.

  • John||

    I think Randian's point is not that it will get people to buy insurance. It is that the penaltax is not some small thing that no one will notice. It is pretty stiff. And people are going to notice it and be pretty pissed about it.

  • Lord Humungus||

    especially when it bites into their "I got my tax return back, let's go on vacation" money.

  • R C Dean||

    Vari, I'm perfectly happy to leave that myth out there. I want people to stay out of the exchanges because they think the penaltax is only $95, and I want those same people pissed off as monkeyhumping hell when they see the real penaltax next year.

  • some guy||

    Regarding the individual mandate, can someone clarify something for me? My understanding is that the IRS can only deduct the penaltax from your refund. They can't add it to your liability up front. Is this the case? If so, I forsee a lot of young invincibles decreasing their withholding this year...

  • Ken Shultz||

    My understanding is that you cannot be jailed specifically for having not paid the penaltax, but the IRS isn't tracking two separate outstanding bills.

    They're gonna treat the penaltax like all the other money you owe them. There's no separate account. It's just that when it comes time to criminally charge you for tax evasion or failure to pay, the judge is going to look very critically during sentencing whether you're just being found guilty of not paying the penaltax.

    The IRS has myriad ways to ruin your life without ever sending you to jail, though. They can ruin your credit, your reputation with your boss, garnish the wages you need to pay rent, make it impossible to get a home loan, etc., etc.

  • Ayn Random Variation||

    That's a good point. Anyone who actually believes you can get away with not paying the penaltax hasn't been paying attention, which is most people.
    However, since Presidents basically have dictatorial power at this point, a President Paul would "encourage" the IRS to leave those people alone.

  • John||

    The IRS can't go after everyone. If a critical mass refuses to pay the penaltax, the IRS would be unable to enforce it. You can't throw everyone in jail. The whole tax system is based on voluntary compliance. They make examples of a comparatively few people so that everyone else stays in line. That works great as long as only a few people have reaason to or courage enough to break the law. But if things change such that so many people break the law that the chances of getting caught become small enough that it is worth risking it, the whole system falls apart.

    If they try to enforce the penaltax, they creating a real possibility of that happening and destroying the whole tax system. If you don't believe that can happen, go look at Greece. In Greece, tax evasion is so pervasive the government is nearly powerless to collect taxes. And they throw tax evaders in jail. It is that there is no way to throw enough people in jail once everyone starts evading the system.

  • R C Dean||

    My prediction: The IRS will apply whatever money you have paid (withholding, whatev) to the penaltax first, leaving them with full enforcement powers to go after the rest. The limitations on enforcing the penaltax will be a dead letter, in practice.

  • The Late P Brooks||

    premised on getting young, healthy people to pay way too much for their health care in order to subsidize coverage for older, sicker people.

    care INSURANCE

    Health insurance not same as health care.

  • some guy||

    Next you'll be telling me that war spending is not the same as defense spending...

  • John||

    When your insurance policy determines what doctor you see and what significant care you get or don't get, it effectively is.

  • RBS||

    My wife works in large oncology practice and supposedly only one practice in the entire state is available under the exchange plans.

  • ||

    What Peter wrote is accurate. ACA forces insurance companies to not charge old people more than young, or at least limits the disparity, so they are basically subsidizing old people's insurance by jacking up rates on young people.

  • ||

    Oops, I see what you're saying. Disregard!

  • ||

    Enrollment statistics show that only 24% of enrollees so far are aged 18-34, a critical group in ensuring that lower claim costs subsidize the higher claim costs of less healthy, older individuals.

    Refreshing honesty from Moody's!

    The standard journalist/editor at best puts it like this:

    In California, health care experts say, the number of young invincibles needs to grow to 36 percent to help balance the exchange's risk pool of younger, healthier enrollees with the number of older and sicker enrollees.
  • ||

    'Balance' is one of the magic (buzz)words, like 'sustainability'. Supposed to convey some warm, touchy-feely notion to the unenlightened reader -- and means a mailed fist to the speaker.

  • JW||

    I have this crazy idea.

    Instead of a Rube Goldbergian contraption of infinite complexity, in which every action is a boot on a stick to kick you in the ass towards the goal, how about this:

    We take the shackles off the health insurance industry, let them sell any kind of policy, even a la carte, to anyone they want and they can compete against one another to provide the greatest value for your dollars, through soime kind of "market." They could even advertise!

    They could even come up with kooky mascots, like a semi-doable lunch lady or some kind of amphibian. They could even advertise! The gubmint's only role is to enforce the honesty of the policies via judicial action. And if you didn't want a policy, you could skip it altogether and take your chances, knowing that you'll get stuck with the full bill.

    It's the Devil's own kind of lunacy, but it could work!

  • John||

    But under such a system Sandra Fluke might not be able to afford birth control. And someone who doesn't have insurance and gets sick might have to declare bankruptcy or go to a charity hospital. What kind of a monster are you JW?

  • itsnotmeitsyou||

    That's MADNESS, JW! MADNESS I SAY!

    What's next, huh? Letting people use whatever recreational substances they want?

    I bet you think that businesses would have to conform to the pressure that their customers place on them, absent gubmint force. Don't you?

    CATS AND DOGS, LIVING TOGETHER!

  • Pelosi's Rabbit||

    Semi-doable? I'd hit it. And brag about it.

  • Pelosi's Rabbit||

    TIWTANLW.

  • The Late P Brooks||

    We take the shackles off the health insurance industry, let them sell any kind of policy, even a la carte, to anyone they want and they can compete against one another to provide the greatest value for your dollars, through soime kind of "market." They could even advertise!

    And what guarantee do we have these companies would respond to political incentives important to people trying to get (re)elected, instead of concentrating on a business model dependent on the acquisition of filthy lucre?

    Get your priorities straight, for heaven's sake.

  • andarm16||

    I think the core issue here is that cross-subsidization can't work forever. Look at the railroads, which were forced by the ICC to operate increasingly unprofitable branch lines and passenger trains. It worked for a while, but by the sixties and seventies, the system was in shambles. Now, this may take time to get that bad, as there is no non regulated equivalent to the health insurance industry. But, I think you'll start to see the young invincibles start to demand more bang for their buck. (Which will of course play off the Dems seeing these people as the key to some mythical permanent majority) Once this happens, you will have the equivalent of the government favoring road transportation of first class mail -- Semi profitable insurance companies will turn into massive money losers overnight. AMHEALTHCARE (can't call it single payer because that doesn't poll well) won't be far off then, and only then will the real fight start.

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