The time bomb in Obamacare?
This column by George Will caught my attention. Read it a few times. *ALMOST* understand it. Clarifying comments welcome!
A willow, not an oak. So said conservatives of Chief Justice John Roberts when he rescued the Affordable Care Act (ACA) â€” a.k.a. Obamacare â€” from being found unconstitutional.
But the manner in which he did this may have made the ACA unworkable, thereby putting it on a path to ultimate extinction.
The problems arise from the interplay of two ACA provisions â€” â€śguaranteed issueâ€ť and â€ścommunity rating.â€ť
The former forbids insurance companies from denying coverage because of a personâ€™s preexisting health condition. The latter, says Lambert, requires insurers to price premiums â€śsolely on the basis of age, smoker status, and geographic area, without charging higher premiums to sick people or those susceptible to sickness.â€ť
The point of the penalty to enforce the mandate was to prevent healthy people â€” particularly healthy young people â€” from declining to purchase insurance, or dropping their insurance, which would leave an insured pool of mostly old and infirm people. This would cause the cost of insurance premiums to soar, making it more and more sensible for the healthy to pay the ACA tax, which is much less than the price of insurance.
Roberts noted that a person earning $35,000 a year would pay a $60 monthly tax and someone earning $100,000 would pay $200. But the cost of a qualifying insurance policy is projected to be $400 a month. Clearly, it would be sensible to pay $60 or $200 rather than $400, because if one becomes ill, â€śguaranteed issueâ€ť assures coverage and â€ścommunity ratingâ€ť means that oneâ€™s illness will not result in higher insurance rates.
So, Lambert says, the ACAâ€™s penalties are too low to prod the healthy to purchase insurance, even given ACAâ€™s subsidies for purchasers. The ACAâ€™s authors probably understood this perverse incentive and assumed that once Congress passed the ACA with penalties low enough to be politically palatable, Congress could increase them.
But Robertsâ€™s decision limits Congressâ€™s latitude by holding that the small size of the penalty is part of the reason it is, for constitutional purposes, a tax.
Go read it in its entirety. A few times. What do you think?