How Does Free Insurance for Healthy People Pay for Sick People’s Medical Care?

According to a
recent
analysis by the consulting firm McKinsey and Company, about 7
million Americans will qualify for free health insurance policies
under the Affordable Care Act once federal subsidies are taken into
account. That includes about 6 million people who are currently
uninsured and about 1 million who have policies purchased on the
individual market. All of them have incomes that are too high for
Medicaid but low enough to receive subsidies that will fully cover
the cost of a “bronze” or “silver” plan on a government-run
exchange. The New York Times says
this free medical coverage is not only a boon to the
recipients but also a shot in the arm for Obamacare, since “the
availability of zero-premium plans may make the deal especially
enticing to the healthy young people the marketplace needs to
succeed.”

Wait a minute. It’s true that younger, healthier policyholders
are expected to subsidize medical care for older, sicker
policyholders, especially now that it’s illegal to charge people
based on how much covering them is expected to cost. But that works
only if the younger, healthier policyholders are paying for medical
coverage they rarely or never use; if they are not putting any
money into the system, how can they possibly improve its financial
condition?

Instead of paying for the premiums of the young and healthy, the
government could directly subsidize coverage for people who really
need it. Wouldn’t that be cheaper? More generally, Obamacare seems
like an unnecessarily complicated way of forcing some Americans
(the ones who do not qualify for subsidized premiums) to pay for
other Americans’ medical treatment. The mandates, the exchanges,
and the individual insurance requirement combine to transfer
resources from richer, healthier people to poorer, sicklier people.
This hardly seems like the most straightforward or efficient way of
helping people who cannot afford health care, but it does serve to
conceal what is actually going on, to the point that a leading news
outlet claims each healthy person covered at taxpayers’ expense is
somehow saving taxpayers money.