• The economics of community rating and the individual mandate

    If you think the purpose of the individual mandate is to avert a death spiral by addressing health-based selection into the insurance pool, I would agree with you. But, it turns out, there’s another economics argument. Read about it on the LDI site.


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    • I understand that Frakt chooses to comment on the system we have (age based community rating) not on the system we don’t have (pure community rating), but wouldn’t it be consistent, when commenting on the Dutch and Swiss experiences for him to point out that both have pure community rating. Frakt’s premise is that a modified age based community rating system such as ours (with a three to one limitation) discriminates against younger insureds. More is less, less is more. Any discrimination, whether by pre-existing conditions or by age, does not benefit those who are discriminated against. An honest comment would acknowledge the real premise, which is that pure community rating significantly increases the cost of the subsidies necessary to achieve universal insurance coverage, and the administration was willing to sacrifice pure community rating for what it considered the higher priority of universal insurance coverage. I’m sure the nearly old would appreciate a thank you for bearing a part of the cost of achieving the higher priority of universal insurance coverage.