What Just Happened?
By Bryan Caplan
Can someone help me make heads or tails out of this piece on the Senate bill? Key claims to reconcile:
1. Demand for health insurance is going way up:
Health insurers get some big presents in the Senate’s health overhaul
bill — about 20 million new customers and no competition from a new
2. But the main customers will be money-losers:
People without insurance would be required to
buy it — in some cases, subsidies will help them pay for it — or face
fines if they don’t. Insurers, in turn, would no longer be able to deny
coverage based on pre-existing conditions such as diabetes or cancer.
the proposed fines are too weak and the subsidies too meager to truly
motivate people to buy insurance, Laszewski said. This means the people
most motivated to buy coverage through these exchanges will be those
who already have health problems — who are money losers for insurers.
3. Insurer stocks are way up:
Shares of the five largest managed care companies have risen more than
120 percent, on average, since they bottomed out in early March. In
contrast, the Standard & Poor’s 500 index has increased about 63
percent over the same span.
You could say that in March, the industry expected much worse, but is that really credible? Wasn’t the most reasonable guess in March that Obamacare would peter out just like Hillarycare sixteen years earlier? What’s really going on?