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Economics of the Individual Mandate

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So we all know that compulsory "private health insurance" is immoral, violates the rights of everyone involved, but what about the economic effects of the individual mandate?

Obviously, if someone is too poor to afford insurance, having a government decree making it illegal to not have it will do nothing put punish an innocent person for economic crimes.

Will it actually cause "overall costs" or any costs to go down as promised? Or will it further inflate any prices? What are the consequences? Help me out guys.

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This bill expands the Medicaid program and there are subsidies in it to assist anyone who is supposedly too poor to afford insurance. As is usually the case, I'm sure those subsidies will also cover some people who can afford insurance but make other economic choices. One of the big practical problems with Obama-Care is that it expands coverage while doing little to reduce costs. In fact, we all know what happens when we increase demand and reduce supply. Prices must increase. The only way the government can control healthcare costs under this scheme is by rationing. They will have to pay doctors less (resulting in fewer doctors, of course) and make it more difficult for people to receive care, especially expensive procedures. One can see where this will go by simply looking at Canada or Great Brittain. There is a reason why cancer survival rates in those countries are lower than they are here. This bill is going to kill a lot of Americans, all in the name of social justice and income redistribution.

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Providing "free" health care is inflationary because it eliminates the natural economic restraints on seeking health care.

Forcing people to purchase insurance is inflationary because it incentivizes people to make it worth their while, and seek health care (i.e., seek returned value) for their forced investment.

Insurance itself is inflationary because any pooling of risk reduces the inherent risk of any one person, and leads them to take risks they might not otherwise take. Since everyone increases their risk-taking, the overall risk (cost) for the population increases. (see the subprime mortgage meltdown)

Eliminating lifetime limits on insurance payouts increases the cost of insurance by increasing the actuarial costs calculated by the insurance companies.

Forcing young healthy people to buy insurance is inflationary because it shifts health care costs from the old/infirm to the young, decreasing the cost of insurance for the old, and thus increasing their coverage, and thus their care costs.

A public option, which is necessarily subsidized with taxpayers dollars, increases costs for the same reason.

The only thing government can do to decrease costs is put a gun to the heads of doctors and force them to take less payment. This is what they do with Medicare, and you can see the results: doctors are refusing Medicare patients, and even Walgreen's is refusing Medicare prescriptions. The doctors who do take Medicare, or provide free care to the indigent, simply charge more to insured patients, which is a major cause of the so-called medical inflation in recent years.

The effect of limited price controls is always a black market to balance supply with demand. The effect of universal price controls is always the same, it increases demand and decreases supply. Since actual demand must necessarily equal actual supply, the elimination of price signals to regulate this balance will lead to other mechanism: waiting lists and death panels (Call them what you may).

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The Economist does a decent job of looking at the likely effects of the new bill:

"What will it mean for America? The short answer is that the reforms will expand coverage dramatically, but at a heavy cost to the taxpayer. They will also do far too little to rein in the underlying drivers of America’s roaring health inflation. Analysis by RAND, an independent think-tank, suggests that the reforms will actually increase America’s overall health spending—public plus private—by about 2% by 2020, in comparison with a scenario of no reform (see chart). And that rate of spending was already unsustainable at a time when the baby-boomers are starting to retire in large numbers."

http://www.economist.com/world/united-stat...ory_id=15769767

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