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The fatal flaws in healthcare reform (6)



The Joint Committee on Taxation has just discovered another fatal flaw in the just-passed healthcare reform bill: the government has no ability to enforce the mandate that all must purchase a healthcare policy. You can find the full explanation here. (HT: Glenn Reynolds)

This discovery modifies the first of my list of four fatal flaws that I summarized last December. I indicated then that the penalty for not purchasing a policy was likely to be less than the cost of the policy for a great number of people. When coupled with the ability of anyone to buy a policy despite any pre-existing conditions, this would mean that large numbers of people would simply opt to pay the penalty, thus saving money, and buy a policy only after they got sick. Unless this error is fixed, it is now almost certain that vast numbers of people would choose to buy a policy only after they discovered they had a serious illness. Revenues from policy premiums would thus fail to match costs and eventually bankrupt the insurers, leaving the taxpayer to pick up the tab. This would hasten the arrival of the single payer system that Obama and leading Democrats have wanted all along. (Perhaps this fatal flaw was intentional?)

I suspect we'll find many more such errors, omissions, and oversights in the legislation passed. I can only begin to imagine the unintended consequences of this legislation that are likely to arise in the future. It's a great reminder that governments cannot run industries, much less economies. Even the smartest of bureaucrats and politicians have only a fraction of the intelligence of free markets.

I continue to believe that the defects of this legislation are so massive and pervasive that it will never see the light of day.

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