Nov 03 2009

Sometimes it’s cheaper to just pay the fine

Category: government,healthcareharmonicminer @ 9:44 am

Here is a young man who currently buys his own health coverage, who saysWhat He’ll Do If We’re Forced To Buy Health Insurance.

If the Max Baucus iteration of health care reform eventually becomes law, then as soon as the federal mandate for individuals to carry health insurance goes into effect, I will very likely defy the mandate, cancel my health insurance, and pay the $950 annual fine. It will not be done out of protest, but out of sheer rational cost-benefit calculation.

And so it goes.

The primary fallacy of government (and most other bureaucracies) is that when they create a policy to try to make a certain group of people act a certain way, they change the circumstances for everyone, not just the group that is targeted by the new policy.

When a national health care program along lines currently proposed by Democrats gets enacted, we will see floods of people changing their behavior to get the most they can from the new situation.   That’s why Obama’s promise that “you can keep your coverage if you like it” is laughable when the government has created incentives for business to stop offering coverage and simply dump employees into the government plan.

And in the meantime, a lot of young people are going to simply pay for the fine for not being covered and then use the free government health care, right up until they start having age related issues that the government plan won’t manage so well, at which point they’ll take advantage of new laws requiring private insurers to take anyone, regardless of previously existing conditions.  In other words, they’ll game the system.

Bureaucracies are always beset by unintended consequences when they try to get people to do something that they don’t want to do for other reasons.  That’s because when you change the rules, everyone will act out of self-interest, and no one is smart enough to foresee all the creative ways people will have of doing that.

The classic model of this is the IRS code, which is so huge and complex because of attempts to try to “game the system” by tax payers when the code was simpler.  The Social Security code and regulations isn’t much better.

Prediction:  if health care is nationalized, we’ll see a whole NEW profession.  It will be the profession of people who help other people navigate the health care system.  It will be modeled after the tax preparation industry.  Expect to see TV ads for services to help you get the “health care your entitled to.”  And expect lawyers to make a lot of money “fighting the government” to get them to pay up.

And expect a lot of creative people to find all kinds of ways to game the system.