Economist Robert Frank writes in this morning’s New York Times:

Republicans have promised to replace Obamacare with something better. Everyone, Mr. Trump included, insists that any plan must require insurers to offer affordable coverage to people with pre-existing health conditions. But that’s not possible financially unless the insured pool includes predominantly healthy people. . . . Failure to include a mandate would eliminate the freedom of citizens to purchase affordable health insurance. In such cases, we must decide which of the competing freedoms is more important.

Like every good liberal, I support the Affordable Care Act, including its guaranteed issue, adjusted community rating, and individual mandate provisions. [By “guaranteed issue,” I mean the requirement that health insurers must offer coverage to everyone — regardless of preexisting conditions. By “adjusted community rating,” I mean the rule that health insurers can’t charge higher premiums based on actual or expected health status. By “individual mandate,” I mean — of course — the requirement that individuals get health insurance coverage or pay a penalty.] But I don’t believe that an individual mandate is necessary if we want guaranteed issue and adjusted community rating. We can have guaranteed issue and adjusted community rating without an individual mandate — we’ll just need more generous subsidies.

Ultimately, if we’re going to maintain private health insurance markets instead of implementing a public option, we need health insurers to be breaking even or making a profit. Revenues must equal or exceed expenses. Requiring health insurers to cover individuals with preexisting conditions will raise expenses. So we need to provide an influx of revenues from some source.

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