Wednesday, June 15, 2011

Intrade Contract For Health Care Law Declared Unconstitutional Drops 40 Percent

The odds on Intrade that the US Supreme Court will find the individual mandate in the new healthcare law unconstitutional before December 31, 2012 dropped 40 percent from 50 to 30.

The contract is more complicated than usual because there is a short limit on the time for the event to occur and there is a specific reason in the contract for the law's unconstitutionality, the individual mandate is unconstitutional. The contract's value and risk depends on time and a specific reasoning of the court, even if the law is declared unconstitutional.
  1. If the US Supreme refuses to hear the case, the contract will expire at 0 value.

  2. If the US Supreme Court decides the constitutionality of the law after December 31, 2012, the contract will expire at at 0 value, even if the Court declares the law unconstitutional at that later date.

  3. If the Supreme Court declares the health care law unconstitutional for reasons other than the individual mandate and finds the individual mandate within the powers of Congress, i.e. healthcare law declared unconstitutional but not due to individual mandate, the contract will expire at 0 value.

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