Uncle Sol Starting a thought farm

Health Care Fallout

Karl Denninger at the Market Ticker thinks that there will be some very serious unintended consequences to the health care package congress is currently passing. Well, if you read the piece, you'll see he doesn't think the consequences are unintended at all. Personally, I believe that politicians are idiots and are incapable of seeing what incentives they create with their legislation. Regardless, it's quite a mess. Click here for the full story.

Here's the bottom line:

• If you refuse to buy health insurance, you will be fined on a sliding scale that amounts to 2% of your AGI. So if you make $100,000 a year, you could be fined $2,000 for "refusing" to buy insurance.
• You cannot buy a catastrophic policy any more. The "cheapest" acceptable policy will cost somewhere around $15,000 for a single person, and over $20,000 for a family. This is, for most people, more than five times the maximum possible fine - each and every year. The law makes it effectively impossible to maintain an existing catastrophic policy as they "renew" every year, and should any change be made you are then forced to buy something "acceptable" in the law (or pay the fine.)
• When the "pre-existing condition" bar comes down you cannot be charged more or denied coverage due to pre-existing conditions.
• I fully expect 20-50% premium increases immediately, and for the next three years sequentially, in all existing policies. This is precisely what the banks did in front of the CARD act becoming effective, and it will happen here as well. That is the cause of the short-term rocket shot in the health-related stocks this morning

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