The individual and small group markets are made up largely of healthy people who don’t use a lot of services.
The administration needs at least 2 million healthy people who don’t use a lot of services
to join the exchanges in order to subsidize coverage for the poor and the sick. If they don’t join, the risk pool gets worse, prices go up, eventually insurers will flee the exchanges — and the whole thing collapses.
While the individual mandate is supposed to coerce uninsured healthy people without insurance to join the exchanges, the problem is that the penalties are too weak —
just $95 in the first year. Why would a healthy person who does not think they need insurance pay $55 a month (or $660 a year) for a $6,000-deductible plan when they could just pay a $95 penalty instead?
So the administration needed some way to force currently insured healthy people into the exchanges. How serendipitous, then, that millions of mostly healthy people are suddenly seeing their health plans cancelled. If they cannot afford the skyrocketing prices to keep similar coverage, they have no choice but to join the exchanges. The result?
A massive involuntary transfer of Americans out of private health insurance they were happy with into Obamacare plans.
