An alternative to defunding: Let Obamacare implode on its own

Linda Chavez has an op-ed in the New York Post that posits an alternative to Obamacare defunding that perhaps has a better chance of succeeding in getting rid of the law.

Why not allow the law to take effect, sit back, and watch as the law implodes?

The entire premise on which the bill passed was that it would make health care universally available and thus cover the estimated 49 million uninsured Americans. But the premise was always wrong. Given the choice to pay a nominal government fine or buy insurance that costs 10 times more -- at a minimum -- most of the uninsured will remain uninsured.

The key to the law was a provision requiring individuals to buy insurance or pay a fine. But the fines are far less expensive than insurance -- and for many of the uninsured, they will seem the better alternative.

In 2014, unless the president or Congress delays implementation, individuals will have the choice to buy an insurance policy or pay a $95 fine. If you're a low-wage worker, young and healthy, the penalty makes more sense than insurance. Even if you're older and less healthy, you won't be turned away at an emergency room should you need care. So why enroll?

The fines go up each year -- $325 in 2015 and $695 in 2016 and beyond -- but at their highest the fines are about half the cost of the cheapest health care plan.

And there are plenty of loopholes to get out of paying the fines. If your income falls below the threshold of filing for federal income tax, you're exempt. You also can seek a hardship waiver from the secretary of health and human services. And if you're one of the 11 million illegal immigrants living here, you don't have to buy insurance.

I'm going out on a limb here, but I predict that two years into implementation of the law there will still be in excess of 30 million people uninsured under this plan. But the problems for those who already have insurance will be even worse.

Premiums are bound to go up significantly. The law mandates coverage for pre-existing conditions and requires insurers to pay for procedures and services they previously had the discretion to withhold or charge more for, which makes providing health care to the insured more expensive. The only way to hold costs down is to bring younger, healthier people into the system. But those are the very people most likely to pay the fines rather than pay exponentially more for insurance.

ObamaCare is a house of cards just waiting to fall of its own weight. As unhappy as Americans are now at the prospect of ObamaCare, just wait until they have to live under it. Even Democrats will be pushing to rewrite the law once their constituents feel its full effects. Patience will pay off for the GOP.

All of this is probably true. The problem is that in two years, consumers will have gotten used to the subsidies and there would be far less support for defunding or repealing at that point. Also, consider Obamacare an octopuss whose tentacles would have spread throughout the health care sector of the economy in two years, making it next to impossible to repeal without significant economic dislocation.

In fact, it's a good bet that in two years, health insurance companies will be fleeing the state exchanges because they won't be able to make a profit due to fewer healthy people signing up for insurance and more sick people in the system. Premiums are tightly regulated and it is doubtful many states will allow companies to charge consumers what is required to avoid losing money.

There's a chance that Obamacare could implode much sooner. If that's the case, the GOP should have an alternative reform plan ready to go. When even Democrats are forced to face reality, repeal and replace becomes possible.

Hat tip: Ed Lasky

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