Key Facts
Consequences of Restrictions
Well-meaning restrictions prevent insurers from pricing premiums based on risk, which has the unintended consequence of increasing the cost for everyone else in the marketplace. That might not be much of a problem if healthier people didn’t change their behavior in response.
Marketplace Disruptions
When healthy individuals' premiums go up, many of them decide that insurance coverage isn’t worth it at that price and drop out of the market altogether – or drop out and wait until they get sick to purchase insurance again.
Solution
So what's the solution? Instead of regulating prices, the government could provide higher-cost individuals with direct subsidies based on financial need.
Targeted Subsidies
Through targeted subsidies, healthy people will have an opportunity to stay in the market, leading to lower prices, and sick people will be able to purchase health insurance at rates they could afford.