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EDITOR, Daily News:
On Nov. 24, your paper published a Point of View column by Sen. Lisa Murkowski in which she defended repeal of the individual mandate by stating: “The only difference would be is if you choose to not buy health insurance the government would not levy a tax on you.”
I’m afraid that’s not quite true. Another difference is that, without the mandate, you will be paying significantly higher premiums. The Congressional Budget Office has estimated that eliminating the mandate will ultimately cause 13 million Americans to drop their health insurance, raising insurance premiums by 10 percent across the board.
The individual mandate exists in order to provide affordable care for people with preexisting conditions. For this to happen, there has to be a large pool of healthy people who can absorb the costs of supporting the old and sick. This is the iron logic of insurance: The healthy subsidize the sick. Social Security, which is mandatory, works much the same way: The young and middle-aged pay for the old. In the past, insurance companies kept premiums down by excluding and ejecting the chronically sick from their insurance pools whenever possible. The Affordable Care Act went the other way, eliminating discrimination while expanding the healthy pool through the mandate.
Without the nudge created by the mandate, healthy people will be heavily incentivized to cheat the system by forgoing health insurance until after they become seriously sick. The reduced insurance pool will result in the costs of the sick being spread across fewer healthy people. And when the free-riders inevitably fall ill and apply for reinsurance, or get treatment in the emergency room, the expense of treating them will be felt by everyone in the form of higher insurance premiums and increased hospital bills. Higher costs will in turn force responsible people out of the insurance markets, increasing premiums further.
Sen. Murkowski also wrote: “Alaskans pay the highest price for premiums in the country; that is why the number of people enrolled on the exchange in Alaska has shrunk every year since the ACA was passed.”
Unfortunately, repealing the mandate will only make this worse.