Government mandate!

Most of the 'unconstitutional' arguments for the repeal of the Affordable Care Act (ACA or Health Care Reform Law) point to the requirement in the law for minimum coverage provision. That is, everyone is required to have a form of minimal insurance whether they want it or not. The folks against this requirement argue that this is "unprecedented governmental mandates that restrict their personal and
economic freedoms". They also contend, “the federal government could mandate
that we all join a health club and indeed impose on us a penalty for not actually attending the club, to take multi-vitamins daily, and to dine only in government approved ‘health’ restaurants.”

A requirement for folks to join a health club or exercise at minimum is not a bad idea considering the obesity problem plaguing this nation. But levity aside, from my perspective, the obvious benefit with this requirement is that everyone will have some form of health insurance. As close to universal care as we can get. Of course, not everyone sees this as a benefit. Especially folks who don't want to pay for some one else's care. I understand this argument. But beyond the moral argument, is there an economic reason for the mandate?

The uninsured, like plaintiffs, benefit from the ‘guaranteed issue’ provision in the Act, which enables them to become insured even when they are already sick. Without the minimum coverage provision, there would be an incentive for some individuals to wait to purchase health insurance until they needed care, knowing that insurance would be available at all times. As a result, the most costly individuals would be in the insurance system and the least costly would be outside it. In turn, this would aggravate current problems with cost-shifting and lead to even higher premiums. [h/t Balloon juice]

This is from a ruling by one of two federal judges who upheld the law in a case filed for repeal. Insurance premiums rise or fall based on costs incurred by the insurance company in reimbursing claims. And the majority of the costs/claims come from a small number of folks who need a lot of care as illustrated by this article on Medical Hotspots. Anything that alleviates this cost is good for everyone.

Of course, how can we ensure that insurers will actually lower their premiums when their claim costs go down? The ACA requires companies to spend a certain amount of the premiums that they collect on medical care for the customers actually paying the premiums—thus limiting the amount that can go for administrative expenses and profits. If their payments for medical care is reduced, they will have to reduce premiums they collect in order to account for this requirement.

There are things that are good in this ACA. It is not ideal, but it is certainly a decent start.