> It's a terrible feedback loop, one which the IRS penalties were designed to solve.
But it shouldn't be surprising that the IRS penalties (in current form) could not solve this. This eventuality was predicted before the law was passed in the Senate (e.g., [0]). It seems fairly obvious that this would happen unless fines are somehow pegged to the cheapest insurance rates (as dpweb notes in this same HN story[1]).
Wouldn't the problem with that be, insurance companies would have an incentive to raise prices as high as they can, knowing that the public would basically be required by law to pay them (or an equivalent penalty)?
That incentive sounds pretty terrible for the public. Great for insurance companies though.
Insurers are now limited to making 20% profit maximum under ACA to prevent pathological scenarios like that. Will there be a reduction in "innovation"? Maybe, but how much innovation do you need from a payment scheme? In any case, the game now is to increase their subscriber base by stealing from competitors or the uninsured, both likely to result in benefits to consumers.
> Wouldn't the problem with that be, insurance companies would have an incentive to raise prices as high as they can, knowing that the public would basically be required by law to pay them (or an equivalent penalty)?
The public is already required by law to pay the insurance companies. But with a fixed, lower fine, I suppose there's a "laffner curve", where insurance companies can't raise their prices too much or enough people will opt for the IRS penalty that the insurance market would stop having enough buy-in.
But it shouldn't be surprising that the IRS penalties (in current form) could not solve this. This eventuality was predicted before the law was passed in the Senate (e.g., [0]). It seems fairly obvious that this would happen unless fines are somehow pegged to the cheapest insurance rates (as dpweb notes in this same HN story[1]).
[0] https://reason.com/blog/2009/11/06/higher-premiums-less-cove...
[1] https://news.ycombinator.com/user?id=dpweb