Ill-Conceived Individual Mandate May Trigger Insurance Market Death Spiral

“the Congressional Budget Office announced the results of a new analysis of the Affordable Care Act’s individual mandate, the law’s provision that forces Americans to buy health insurance or face a fine. According to CBO, 11-12 million uninsured Americans will be subject to the mandate; the agency expects more than half of them to pay the fine instead of buying insurance. But there’s something that the CBO didn’t say: as more people pay the “tax penalty” instead of buying insurance, premiums for everyone else will go up, potentially triggering a death spiral in the private insurance market.

“More and more people—especially young, healthy people—will choose to pay the $695 fine instead of spending 10 times that on health insurance. As they do, the individual mandate will fail in its central purpose: forcing all Americans into the insurance system, so that premiums don’t increase for the chumps who pay for insurance year-round.”

CBO: 11 Million Uninsured Americans Will Be Subject to Obamacare’s Individual Mandate ‘Penalty Tax’
Avik Roy

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