Finally, Krugman admits the problem with a ban on pre-existing conditions clauses in health insurance.

From Paul Krugman’s column today:

Suppose, for example, that Congress took the advice of those who want to ban insurance discrimination on the basis of medical history, and stopped there. What would happen next? The answer, as any health care economist will tell you, is that if Congress didn’t simultaneously require that healthy people buy insurance, there would be a “death spiral”: healthier Americans would choose not to buy insurance, leading to high premiums for those who remain, driving out more people, and so on.

He could have generalized and said, “as any economist who has thought about insurance will tell you.” This knowledge goes well beyond health economists.

This is what I called, in a 1994 op/ed, “adverse selection by law.”

What’s Krugman’s solution? An individual mandate. But what he doesn’t tell you in his article that urges the House to pass the Senate bill is that the penalty for not getting health insurance is only 2% of income. So if someone making $30,000 wants to avoid getting health insurance, he would pay an annual tax of only $600. And this, Krugman apparently thinks, is enough to cause that person to buy health insurance even though he can wait until he gets sick (remember: insurance “discrimination” based on health is banned) to buy it. Does he really think that $600 or $800 or $1,000 is enough of a penalty? I doubt it.

So what Krugman is really calling for, wittingly or un, is a “death spiral” for health insurance.