Only 29% of uninsured young people now say they plan to sign up for Obamacare,” warns an email we received today from one Mark Crain:
“This could become a gigantic problem, because the only way we can afford to cover all the people with pre-existing conditions is if younger, healthier people enroll as well. If only sick people sign up, our entire health insurance system falls apart.”
In market economies, people respond to adverse stimuli by avoiding it. On one side is unaffordable and un-needed coverage (maternity for men, mandatory pediatric dental for, well, everybody) and opt instead to pay the modest fine. If you can’t get denied insurance for a preexisting condition then why pay when you don’t need it? Sign up when you’re sick.
Our government has created a system where that of their customers will avoid. This neither solves the problems it originally set out to solve nor is remotely helpful in the long run.
But on signing day 2010, it was all cheering. As the audience applauded, Obama promised the new law would “lower costs for families and for businesses.” He cited the case of Natoma Canfield, an Ohio woman whose story he often told during the health care fight. Canfield, divorced and 50 years old, had had cancer but was still able to find what she called “costly, but affordable” coverage on the individual market. Then her insurance company abruptly raised her premium.
“Natoma had to give up her health coverage after her rates were jacked up by more than 40 percent,” Obama said.
Now, because of Obamacare, millions of Americans in the individual market, most of whom have not had a major health crisis, are facing abrupt increases of more than 40 percent in their health insurance premiums. On top of that, they are finding deductibles rising far beyond those that troubled Canfield. (In a 2009 letter to the president, Canfield complained of having a $2,500 deductible; on Monday, the Wall Street Journal reported that under Obamacare “the average individual deductible for what is called a bronze plan on the exchange — the lowest-priced coverage — is $5,081 a year.”)
At this point it’s bad economics to continue to band-aid and shore up a failing, flailing system. Let’s not fall victim of the sunk-cost fallacy, especially when millions of people are suffering (a greater number under the new plan than under the old, “broken”, system).