I’ve been reading through the Supreme Court Individual Mandate transcript. I found the following quite interesting:
JUSTICE ALITO: But isn’t that really a 2 small part of what the mandate is doing? You can correct me if these figures are wrong, but it appears to me that the CBO has estimated that the average premium for a single insurance policy in the non-group market would be roughly $5,800 in — in 2016. Respondents — the economists who have supported the Respondents estimate that a young, healthy individual targeted by the mandate on average consumes about $854 in health services each year. So the mandate is forcing these people to provide a huge subsidy to the insurance companies for other purposes that the Act wishes to serve, but isn’t — if those figures are right, isn’t it the case that what this mandate is really doing is not requiring the people who are subject to it to pay for the services that they are going to consume? It is requiring them to subsidize services that will be received by somebody else.
GENERAL VERRILLI: No, I think that — I do think that’s what the Respondents argue. It’s just not right. I think it — it really gets to a fundamental problem with their argument.
JUSTICE GINSBURG: If you’re going to have insurance, that’s how insurance works.
No, it’s not. If you’re going to have “insurance” with “community rating”, that’s how it works. But in normal insurance, those young healthy people would be paying something around $854 / year for their health insurance, because that’s the average cost of those customers to the insurance company. That’s why people who have accidents and speeding tickets pay higher auto insurance rates than people who don’t have any, and people who live right next to a fire station pay lower home owner’s insurance rates than do people who live 10 miles away from the nearest one.