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Archive for November, 2015

Obamacare Slowly Implodes (Updated)

November 30, 2015 3 comments

Readers of this blog know that I am a critic of the Affordable Care Act.  My view is that it was poorly designed and it has harmed millions of people who have lost access to their doctors and hospitals. (There are links at the end of this article to previous posts on this profoundly misguided law.) There is now accumulating evidence that the insurance exchanges are moving into what has been termed a “death” spiral, a process which can lead to the collapse of the insurance exchanges set up by the law.

This death spiral refers to a situation where insurance companies lose money selling health insurance on the exchanges and thus stop selling insurance to avoid these losses. The exchanges can collapse if all insurers withdraw from the exchanges, leaving millions of Americans without coverage. The design of the Affordable Care Act raises the possibility of this collapse because it limits the ability of insurers to charge higher prices to riskier applicants and because the law requires guaranteed issue, meaning that insurers must sell a policy to anyone who applies. Thus insurers must treat everyone as if they are bad risks and charge correspondingly higher prices for insurance but, if the applicant pool of insurance buyers is dominated by bad risks, insurance companies may lose money on their policies. This latter situation is known as “adverse selection.” There is now accumulating evidence that adverse selection has occurred in these insurance exchanges.

Read more…

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What Do the Children Know?

November 20, 2015 Leave a comment

As reported in the news media recently, there have been a series of student protests on university campuses. A number of grievances have been reported (although some of these are so vague that I have no idea what they really are) but one issue in particular caught my attention. That concerns student loans and there appear to be demands by some students that all student loans should be paid off by someone other than the students who borrowed the money. Specifically, there was an interview on one news outlet with a student “leader” where this student issued a demand that all students loans should be paid off by the rich, however defined.

This got me to thinking.  Does the student know the size of the stock of student loan debt and does he or she know if the incomes of the rich are large enough to pay off student loans? A little bit of data helps answer those questions. Read more…

More Fallout from Obamacare

November 11, 2015 1 comment

I recently saw a news item regarding the events at the University of Missouri resulting in the resignations of two senior university administrators.  That article suggested that the Affordable Care Act had a role in the student protests at the university. Turns out that this is indeed the case.

It appears that one of the student grievances, and also one reason for a hunger strike by a student, involves the loss of health insurance by the university’s graduate students. This loss of insurance was explicitly mandated by Obamacare as explained by a university post last August (you can read it here). That web site reports the following.

Due to changes in federal policy and IRS interpretation of that policy, general counsel has informed us that the University of Missouri no longer is allowed to pay for graduate students’ health insurance. (Previously, the university provided a subsidy to those students who opted in for insurance and were paid from a qualifying assistantship or fellowship). The IRS considers our student health insurance plan an “individual-market plan” rather than an “employer-sponsored plan,” such as our health plans for MU employees.

The Affordable Care Act prevents employers from giving employees money specifically so they can buy health insurance on the individual market. Graduate teaching and research assistants are classified as employees by the IRS, so they fall under this ruling.

So the university finds itself in violation of federal law if it pays for graduate student insurance. I wonder how many students realized this element of the university’s policy? I regard this as just another example of the Law of Unintended Consequences arising from central planning by the government. It also reveals that as the law continues to grow in complexity and in size, it is no wonder that it has been said that every day, each resident of the U.S. commits three felonies and has no idea that he or she has done so.

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