The 2014 '30 Under 30'

Congrats to this year's 30 -- check out the full list here!

For Obamacare to work, we must ignore what insurance is

Obamacare protest U.S. CapitolLiberals are just now grasping the economic case against Obamacare that Tea Party protestors and town hall attendees have made for four years—and they’re still getting it wrong.

Witness Cornell University economics professor Robert H. Frank’s Sunday column in The New York Times called ‘For Obamacare to Work, Everyone Must Be In.’  In it Frank notes that there are two incompatible propositions framing the Obamacare debate: that people should not be denied coverage based on preexisting medical conditions, and that government should not force individuals to buy health insurance.  Both conditions, Frank writes, cannot be adhered to simultaneously.

He describes how banning the denial of healthcare coverage due to preexisting conditions without having an individual mandate leads to an “adverse-selection problem,” whereby people with expensive illnesses are willing to pay the universally priced premiums but healthy people are not. As a result, healthy people tend to drop out of the market, thus driving the price of insurance up. This never-ending process continues until insurance becomes exorbitantly expensive, as demonstrated through case studies from California, Washington, New York and New Jersey.

Frank further argues that the only way around the “adverse-selection problem” is to force everyone to buy health insurance. Labeling the problem “a profound source of market failure” and challenges, he writes: “We must ask those who would repeal Obamacare how they propose to solve the adverse-selection problem.”

There is in fact a way around this dilemma, however, and it doesn’t involve forcing anyone to do anything. It also demonstrates the genius of the free market and not its failures.

That solution: To treat health insurance as – surprise – insurance; that is, to treat it as a voluntary plan that you can invest in if you want or take your chances and decline to purchase if you’re young and healthy. If you decline and get sick, then it’s up to you to pay for your expenses, including potentially relying on savings, family, loans or charity to pay for your healthcare.

Sure, in this system, there are lots of people forking over thousands of dollars a year to insurance companies and getting nothing in return because they are “unlucky” enough to remain healthy. But this is how the insurance companies stay in business – in order to be able to pay a “jackpot” to the few people who develop expensive illnesses their reserves need to be funded by the thousands of other people who don’t get sick.

Insurance with high deductibles is still generally available for people with preexisting conditions for some serious illnesses, and those who have trouble finding insurance can join high-risk pools set up in their states.  But sick people can’t pretend that getting their treatment paid for when they already know they’re going to get sick is insurance.

Frank’s argument is barely more sophisticated than Ezekiel Emanuel’s embarrassing plea to young people several months ago to buy health insurance to show their support for Obama.  But neither Frank nor any other economist is ever going to come to a satisfactory resolution to the adverse-selection problem if they refuse to grasp the fundamental concept of insurance.

 

Comments

Polititainment

Jon Stewart ridicules John Kerry

Jon Stewart on "The Daily Show" Monday made fun of U.S. Secretary of State John Kerry for his inability to negotiate a ceasefire between Israel and Hamas after a 12-hour ceasefire between the two expired.

'True Blood' star takes on Sarah Palin

Kristin Bauer van Straten, who plays vampire Pam Ravenscroft on the HBO program, hit back at the former governor of Alaska for criticizing a recent episode.

Cher rants against Rand Paul
Thrown in between tweets about toothaches, costumes and pool time, Cher decided to rant about Sen. Rand Paul on Twitter Friday night. It was not clear what prompted the Twitter tirade. Cher had just finished giving an update on her toothache and five new “unbelievable” costumes when she switched gears. Mediaite postulated that she may […]
Joel helps explain GOP view on jobs
Apparently John Boehner’s press team is made up entirely of Billy Joel enthusiasts. The Library of Congress announced on Tuesday that this year’s Gershwin Prize for Popular Song will go to Joel. The prize “honors artists whose work has left a lasting impact on audiences and inspired new generations of performers.” And John Boehner’s press […]
Joan Rivers rips media over Israel

In which Joan Rivers takes a sledgehammer to the media.

White House

Golfer finds Obama’s golf ball in the woods, says president’s game is ‘off line’
President Barack Obama is “off line again.” Or at least his golf game appears to be. Instagram user larrydoh posted a picture of a Titleist 44 golf ball labeled “POTUS” on Saturday. He found the golf ball at the Congressional Country Club, one day after POTUS played the same course himself. “Obama played at Congressional […]
Polls: Obama White House incompetent at managing, worse than Darth Vader

The job of the administrative branch is to, well, administer the laws. According to a new Fox News poll released on Wednesday, most Americans think that the Obama administration is failing dismally at the task.

Obama wants ‘idealism and optimism’ for millennials in face of Congressional ‘crisis,’ refuses to recognize he is part of the problem
Now that “hope and change” seems to be played out, President Barack Obama has come up with a new catchphrase for millennials – “idealism and optimism.” In a speech at a Democratic National Convention fundraiser in Seattle, Wash. Tuesday night, Obama asked young people not to give up their natural idealism and optimism because of […]
President Obama admits he does not watch the news

During a speech during a Democratic National Committee event in Seattle, Washington Tuesday night, President Obama confessed that he doesn't watch the news. Throughout the speech, Obama predictably complained about the incompetence of our "broken" Congress and urged his liberal audience to get enthusiastic about voting for Democrats in the midterm elections this fall.

Congress and the President actually take action, Obama says ‘it’s so much fun’
“Girls just want to have fun,” Cyndi Lauper belts in her famous song. Apparently President Barack Obama wants to join her. “Let’s do this more often. It’s so much fun,” Obama said at a bill signing on Tuesday. Obama gathered in White House with members of Congress to sign the Workforce Innovation and Opportunity Act. This […]

Congress

Bridenstine on the #WarOnYouth

Oklahoma Republican Rep. Jim Bridenstine took some time Sunday to tweet about the #WarOnYouth, touching on the economic plight of Millennials today.

Congresswoman's 'miracle baby' turns one
Rep. Jaime Herrera Beutler (R- Wash.) and her husband Dan recently celebrated the first birthday of their “miracle baby,” Abigail Rose. The couple learned early into the congresswoman’s pregnancy that their baby had Potter’s Syndrome. The condition causes a lack of amniotic fluid which prevents the baby’s growth and development, especially of the kidneys. Jaime […]
Obama throws more fuel on lawsuit fire
It appears President Barack Obama plans to keep up his “So sue me” attitude this week. House Speaker John Boehner penned an op-ed Sunday in USA Today that outlined the specifics of the planned lawsuit against the president. He had announced in late June that he would file a lawsuit against Obama on behalf of the […]
Norton: 'You don't have a right to know'

Del. Eleanor Holmes Norton played down the importance of government transparency during a House hearing Friday, speaking out against Republican-led attempts to compel a White House official to appear before the Government and Oversight Committee.

Politicians struggle to 'live the wage'

Goodbye three-course power lunches at swanky D.C.  steakhouses. Hello Ramen noodles and PB&J.