My colleague Conn Carroll and I have been having a back and forth over the benefit of repealing the individual mandate as part of a trigger within the debt deal. Conn takes issue with my assertion that repealing the mandate would unravel the insurance regulations, and he insists that, “Repealing it would make health insurance marginally more expensive…” But I think he drastically understates what would happen to premiums without the mandate, and our experience at the state level bears this out.

Just to refresh everyone’s memory, when the government forces insurers to cover those with preexisting conditions, healthy people exit the insurance market because they know they can wait until they get sick to purchase coverage, and this effect gets compounded by regulations that also prevent insurers from charging based on health status. So as more healthy people leave the market as a result, premiums go up even higher, which drives more of them out, and so on. This was the experience in Kentucky, which instituted the other regulations without a mandate in 1994. Within two years of enactment, 60 insurers had exited the state, leaving it with just one private insurer in the individual market, plus a now defunct state-run plan.