Writing for the RI Center for Freedom & Prosperity, Sean Parnell describes five groups of Rhode Islanders who are likely to seek ways around buying health insurance through HealthSourceRI, the state’s ObamaCare exchange:

• The young & invincibles,
• the gamers,
• the exempted,
• the undocumented,
• and the at risk.

These are the categories in which a person’s circumstances create incentive to find ways around the Patient Protection and Affordable Care Act (PP&ACA). All told, the Center estimates between 70,500 and 97,250 Rhode Islanders to remain without insurance, around 10% of the population, despite the government’s involvement.

The first group — young & invincible — illustrates the general idea well:  At its bottom, ObamaCare rests in large part on the government’s ability to force people who will not require much healthcare to help pay for the care that others receive:

For this population, often just starting their careers and earning relatively modest incomes, with few health needs and little worry about paying for medical care, health insurance is simply not something they place much value in, especially if premiums are much higher than might be considered actuarially appropriate. One of the primary purposes of the individual mandate in the ACA is to get this relatively young and healthy population who might not ordinarily purchase health insurance to do so, which should bring down premiums for the rest of the population, if successful.

The essential principle at play, here, is that markets use prices in order to convey the value of a thing to the person buying it versus the difficulty of supplying it.  Distorting the market’s ability to acknowledge actual values doesn’t change the underlying reality; it just perverts the calculation to include costs for avoiding the distortion or takes resources away from other things.

For a personal sense of what this might mean for you, spend some time playing with HealthSourceRI’s tool to “calculate your savings.”  What the exchange promoters mean by “savings” is actually a tax credit that the federal government will give to folks who qualify.  (Unless the federal government intends to cut its budget elsewhere in order to cover these promotional discounts, this is money that it will have to confiscate from elsewhere in the economy.)

A young family of four earning $75,000 per year will “save” $377 a month on its projected premiums of $970, leaving it with a monthly price of $594.  This transaction only makes sense if the price that a family is willing to pay for health insurance is less than $11,640 per year, but more than $7,128.  If the family was willing to make the larger payment, the government is redirecting money in the economy for no reason; if the family is not willing to make the smaller payment, the promotional discount doesn’t matter.

But the issue is more complicated than that.  It is in the nature of markets and prices that they will find the amount that people are willing to pay.  If the family is willing to pay $10,000 per year for health insurance, the tendency will be for the prices to inflate, regardless of the cost of providing the service, to capture that willingness.  Rather than decrease the promotional discount, though, the likelihood is that the original premium will go up.

Where that extra money goes depends on who has the political power and economic leverage to take it, which will tend to increase, rather than decrease, disparities in wealth.  The more-important point, though, is that the price controls cause progressively worse distortions of the economy.  That prevents money from going where it can do the most good for growth and for human well-being.