What do Congress and the NFL have in common? They’ve both just passed significant new rule changes to correct what they view as systemic problems that result in unjust or unfavorable outcomes. Also: they both have not considered how tinkering with incentives can drastically change behavior, and in doing so, create new unforeseen problems.

Let’s start with NFL: Owners recently changed the structure of overtime (in playoff games only, so far). The old system was a “sudden death” overtime, where the first team who scores wins. Historically speaking, the team that won the coin flip (and thus, the team who had the first possession) won overtime games more often than not. It also often had the effect of keeping major players (Brett Favre, for example, in this past year’s NFC Championship) from being able to contribute to overtime if their teams lost the coin toss.

The new rule is this: If the team with the first possession scores a touchdown (6 pts), then the game is over. But if the team kicks a field goal (3 pts), then the other team will get a chance to have a possession on offense. Basically, it’s conditional sudden death — if your defense is too weak to stop a touchdown, your team doesn’t deserve a chance to field your offense.

How will this change the way overtime is played? We might see more offensive aggressiveness in the red zone (within 20 yards of the endzone), which is a good thing for fans. We might also see a situation that plagues college football overtimes (which have different rules): endless back and forth field goal exchanges resulting in super-long games, which is not good for fans or players.

But we also might see a change in fundamental strategies. For example, does it now make sense to elect to play offense when you win the coin toss? I’m not so sure. In college football, where both teams get a possession no matter what happens, teams almost always elect to start on defense, because then they have the advantage of knowing exactly what they need to do to win or tie. We might see the same thing in the NFL. Teams might be confident that their defenses could prevent a touchdown, choose to play defense first, and then know exactly how aggressive they need to be on offense, while the other team (with the first offensive possession) would have to play more conservatively to make sure they stay in the game. The overall effect of the new rule might — might, not will — have the effect of keeping an advantage for the winner of the coin toss — just not for the team with the first offensive possession.

The problem is that NFL owners aren’t really thinking about how the “solution” changes the landscape of the game, but rather how it fits in within the bounds of the current game landscape.

What does this have to do will health care reform, you ask? Well, the rules that the Democrats have so faithfully fought to turn into law may actually do exactly the opposite of what they intend — it might actually encourage most (if not all) healthy people not to buy insurance.

Stay with me, here, people.

The new health insurance “mandate” is weak; it consists of fines which might be significant in real terms (they start small but increase over time), but which are significantly cheaper than actually paying insurance premiums. Another new rule prevents insurers from refusing coverage to people with pre-existing conditions. So theoretically (and we’ll see how this shakes out, of course), healthy people could just live without insurance, choosing to pay out-of-pocket for run-of-the-mill medical expenses (drugs, physicals) and electing to pay the piddly government fine. Then, if and when they get sick, they’ll apply for insurance coverage, and they won’t be denied.

This seems to be more than just “gaming the system” — it seems to the most rational way to operate under this system. Unless you’re already in need of regular medical treatment, it makes little sense to have insurance at all. The problem is that this whole health care reform is built on a compromise: insurance companies cover everybody, and in exchange the government will force a big chunk of the population who don’t have insurance (read: young healthy people) to give the insurance companies money. This doesn’t work if that segment of the population chooses overwhelmingly to pay the penalty instead (which seems to be in their self-interest). What happens is that the only people who buy insurance are people that need regular medical treatment, and that means that either insurance companies go bankrupt or premiums (and subsidies) increase to unaffordable levels. Thus, the reform would not only lead to fewer people having health insurance, but it would lead to a kind of de facto single payer system whereby sick people pay premiums they can afford and the government pays everything else, and taxes the rest of us to be able to pay for it.

Now, the government could just make the penalty steeper to fix this problem. And the NFL could just adopt college-style rules to get around their overtime concerns. But my point here is that neither has really imagined the behavioral changes that could result from the new rules could very well frustrate the very purpose of the rule change.

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