Monday, December 13, 2010

Economic effect of Virginia Court ruling: adverse selection

If the ruling in Virginia stands, that the individual mandate in President Obama's Healthcare plan is unconstitutional, then only the sick people will sign up for the insurance:

what you will get is a death spiral in the insurance markets, as the healthy people wait to buy insurance until they get sick, and the cost of insurance spikes to the point where no one can afford it.

1 comment:

  1. The mandate was cheap enough that the adverse selection was there regardless. 700 dollars a year was the fine for not having insurance and it much smaller than the price of insurance. In fact it is , iirc, smaller than the average price rise in insurance due to the Massachusetts plan that the Obama plan is based on.