Individual mandate and insurer profitability

Reader comment on: Health Insurance Stocks Soar

Submitted by Richard Belzer (United States), Feb 20, 2012 08:01

Your points are well taken, as it is foolish to ignore the market signal contained in stock prices. Question: Are these increases in share value derived from a local or global minimum such that no (or few) other baselines would yield larger increases? Regarding the individual mandate, if I recall correctly the fine for failure to purchase health insurance is quite small, much smaller than would be necessary to seriously deter moral hazard. If so, then a decision by the Court to invalidate only the individual mandate would have little effect on the ACA, or on insurers' stock prices. If moral hazard were to become a serious problem in a second Obama administration, then there would be pressure to convert the ACA to single payer. But other parts of the ACA significantly reduce the threat of moral hazard, most notably the de facto employer mandate to provide insurance.

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