Obamacare Creates a Big Moral Hazard

For those of you who haven't worked in the insurance field, a moral hazard is, as defined on Wikipedia, "when a party insulated from risk may behave differently than it would behave if it were fully exposed to the risk." Read this next item from The Corner and I'll explain the moral hazard:

Is the Mandate Unenforceable?

According to a report by Congress's Joint Committee on Taxation, the individual mandate in Obamacare lacks any real enforcement mechanism:

The penalty applies to any period the individual does not maintain minimum essential coverage and is determined monthly. The penalty is assessed through the Code and accounted for as an additional amount of Federal tax owed. However, it is not subject to the enforcement provisions of subtitle F of the Code. The use of liens and seizures otherwise authorized for collection of taxes does not apply to the collection of this penalty. Non-compliance with the personal responsibility requirement to have health coverage is not subject to criminal or civil penalties under the Code and interest does not accrue for failure to pay such assessments in a timely manner.

(h/t to Morgen Richmond at BigGovernment.)

This is probably, to echo the vice-president, a B.F.D. Without effective enforcement of the individual mandate, and with proscriptions against denying coverage on preexisting conditions, you've got yourself the potential for a pretty big moral hazard.

Pass the bill to find out what is in it. Or what ain't.

So, the law says everyone is required to purchase health insurance but does not provide an enforcement mechanism. It also says that anyone with a pre-existing condition must be covered.

Why, therefore, would you go buy insurance until you needed it? Moral hazard. Wait until you get some illness that's going to be expensive and then run out and buy a policy that will force an insurance company that hasn't been collecting any premiums from you it the past to cover it. It's a guaranteed loser for the company and a winner for the perp.

As I've said previously the purpose of Obamacare is the destruction of the private health insurance industry. I can't think of a better way to do it than what I just described above.