Indemnity! Whiskey! Sexy!


James Taranto writes: This column has made the point before that there are three phases of the ObamaCare catastrophe. Phase 1, the technical failure, might have been avoided had the administration had some basic standards of competence. But Phases 2 and 3 are inherent in the law.

Phase 2 was the revelation that the ObamaCare enterprise is the most massive consumer fraud in American history–that the “if you like your plan, you can keep it” sales pitch was not only false but deliberately deceptive, and also that ObamaCare forces insurance companies to engage in dishonest practices such as selling maternity coverage to men and postmenopausal women.

Politico notes that the combination of Phases 1 and 2 has created a new way for ObamaCare to fail: “Health care experts say, it’s not out of the question that the Obama administration could face the worst-case scenario on Jan. 1: the number of uninsured Americans actually goes up.” (This columnist is not an expert, but we raised the possibility a month ago.)

Assuming that the politics of ObamaCare remain static–that is, assuming Senate Democrats continue to fear the president more than they fear their constituents–Phase 3 will develop over the coming months. Phase 3 is the demonstration that even if the system is technically functional and the fraud impervious to redress, ObamaCare is economically unviable because of adverse selection: Americans who stand to benefit from the law’s price controls, the old and the sick, will buy insurance in large numbers, while those who get hit by them, the young and the healthy, will not.

The shrunken but still substantial subset of the press corps that remains servile to the Obama agenda has been devoting a lot of attention of late to denying Phases 1 and 2–assuring that the “website” is working fine and that all those fraud victims will find satisfactory recompense in ObamaCare policies. But Ryan Cooper, a protegé of the Washington Post‘s Greg Sargent, is getting out ahead of the story. He’s already denying Phase 3.

In a post titled “Why Millennials Will Come Around on Obamacare,” he enumerates six reasons why young adults will soon be greeting insurance salesmen as liberators:

1. Young people are not actually invincible. . . .

2. Going without insurance is morally wrong. . . .

3. It’s the law. . . .

4. People haven’t grasped how the subsidies work yet. . . .

5. Pressure from mom and dad. . . .

6. Being uninsured sucks!

All of these points except the first seem to us disputable in varying degrees (and of course regarding the first, the point isn’t that the young are “actually invincible” but that they are at low risk and are being called on to pay as if they were at high risk in order to give a break to those who actually are at high risk). But let’s just stipulate them for the sake of argument.

The most obvious objection to these six points is that four of them–all but 3 and 4–were as true before ObamaCare as they are now, and they were not sufficient to induce young people to purchase insurance in anything like the numbers ObamaCare needs to succeed. It’s possible that those four pre-existing conditions were all necessary, and that they, combined with the new ones, will be sufficient. But there is ample reason to doubt it.

Points 3 and 4 describe the new incentives the ObamaCare law creates for young, healthy people to buy insurance. But “It’s the law” overstates the case. “People hate paying fines and generally prefer to follow the rules, even if it would be cheaper to do [sic] pay the fine rather than pick up insurance,” Cooper writes. But the Supreme Court held, in NFIB v. Sebelius, that the “fine” is actually only a tax. It is no more a violation of the rules to forgo insurance and pay the tax than it is to rent a home or buy one with cash and forgo the mortgage-interest deduction.

It’s also true that people with “lower” incomes–i.e., up to four times the poverty line–are eligible for subsidies, which will make buying insurance more attractive for some young adults than it would be if they were paying the full price-controlled cost. But to the extent that subsidies induce young people to become insured, that just shifts the burden to future taxpayers by requiring the federal government to borrow money. Some will also enroll in Medicaid, which won’t improve the insurance pool at all and will actually worsen it if the new welfare cases previously had private insurance.

Higher premiums, meanwhile, provide a disincentive to buy insurance. And there’s another disincentive embedded in, but not acknowledged by, Cooper’s point 6, “Being uninsured sucks!” No one would claim that it rules! But it sucked a lot worse before ObamaCare.

One reason medical policies are so expensive is that their purpose is twofold. They provide not just indemnification against risk–that is, true insurance–but also payment for routine expenses. You can’t buy medical “insurance” without buying an expensive service contract. That was true to some extent before ObamaCare. But that law makes the package more expensive for everybody by mandating both more services and “free” ones, and more expensive for the young in particular by jacking up their rates so as to subsidize higher-risk policyholders.

At the same time as ObamaCare raises the cost of having insurance, it reduces the risk of going without insurance–the reason why doing so “sucks!” As bloggerMichael Eades points out, lacking insurance no longer makes you uninsurable. If you pass up insurance in 2014 and are diagnosed with a serious condition, you may face burdensome out-of-pocket expenses–just as you would have before. But ObamaCare promises that you’ll be able to buy insurance in 2015, and at the same price as if you were still healthy.

As for Point 5, the controversial nature of ObamaCare raises a strong possibility that it will, on the whole, ease rather than heighten the hortatory power of “pressure from Mom and Dad.” Mom and Dad are considerably less likely than Junior or Princess to have voted for Barack Obama in 2008 and 2012, or to have been favorably disposed toward the law in the first place. Points 2 and 3 similarly rely on shared cultural assumptions that cannot be taken for granted in the absence of a broad political consensus that ObamaCare is a good law.

Cooper also has, it seems to us, a rather unrealistic conception of young people as essentially obedient and anxious to shoulder responsibility. The idea that they’ll lay out huge sums for insurance because “it’s the law” is especially fatuous. Did Cooper himself refrain from consuming alcoholic beverages until his 21st birthday?

This columnist is not part of the age cohort in question, but we were once, and a personal anecdote may be illustrative. For a time when we were in our early 20s, we owned a car, which we drove without insurance. Except for the absence of subsidies, all of Cooper’s observations about ObamaCare apply equally well to auto insurance–and driving an uninsured vehicle on a public road really is against the law.

We were well aware that driving without insurance was risky and irresponsible. But the premiums–which were for true insurance, based on our risk profile as a young man–were just too expensive. Our parents probably would have helped us pay if we’d asked, but we were proud and prized our independence. Of course if we owned a car today, we’d insure it. (Our eventual solution to the problem was to move to a city where we didn’t need to own a car, and we still live in such a place.)

We mean not to excuse our younger self, merely to observe that the habits of responsibility are often poorly developed in the young. They also are less likely to have the financial wherewithal to support responsible habits. They have less income to pay for insurance as well as less wealth to worry about losing should catastrophe strike.

One final objection. Read over Cooper’s list again and ask yourself: Is that kind of stern exhortation what they signed up for when they voted for Obama in such large numbers? No, they were attracted by his glamour and his vague idealism. To the extent that they favored ObamaCare in concept, it was because they liked the idea of “helping people,” not punishing them. Much less submitting themselves to be punished.

Two Presidents in One!

  • “Pres. Obama: ‘Government’s not somebody else. Government’s us. We have the capacity to change it.’ “–tweet, @MSNBC, Dec. 5
  • “The health care mess is indicative of broader problems with the federal bureaucracy that he hasn’t been able to solve, Obama told Chris Matthews during an MSNBC interview. ‘The challenge, I think, that we have going forward is not so much my personal management style or particular issues around White House organization,’ Obama said. ‘It actually has to do with what I referred to earlier, which is we have these big agencies, some of which are outdated, some of which are not designed properly.’ “–, Dec. 5

3 Comments on “Indemnity! Whiskey! Sexy!”

  1. Richard M Nixon (Deceased) says:

    Reblogged this on Dead Citizen's Rights Society.

  2. […] Pundit from another Planet James Taranto writes: This column has made the point before that there are three phases of the […]

  3. […] Indemnity! Whiskey! Sexy! ( […]

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.