Six Months Later... | Michael F. Cannon | Cato Institute: Commentary

Six Months Later... | Michael F. Cannon | Cato Institute: Commentary: "ven before the price controls affecting children took effect today, major insurers Wellpoint, Cigna, Aetna, Humana and CoventryOne announced they will simply stop writing child-only policies rather than suffer the inevitable losses. Thanks to this 'consumer protection,' many parents will be unable to insure their children. Expect other insurers to follow suit as adverse selection causes premiums for existing child-only policies to rise.

When those price controls go marketwide in 2014, they will force insurers to avoid sick adults as well. Economists have shown that unless insurers avoid the sick, the price controls will put them out of business. Look for insurers to avoid, mistreat and dump the sick by marketing themselves only to healthy people, skimping on claims processing and customer service, and dropping benefits that sick people value — not because insurers are heartless, but because that is what Obamacare rewards.

The law's authors admitted as much when they included new subsidies and regulations (on marketing, claims payments and benefit design) to mitigate those perverse incentives."

"For example, three years before they even take effect, the marketwide price controls are eliminating an innovation called 'guaranteed renewability,' which protects sick patients from high premiums and skimping. Obamacare has pushed BlueCross BlueShield of North Carolina to dismantle its guaranteed-renewability feature and transfer more than $100 million from sick to healthy customers."