Let us imagine, for simplicity,  an non-profit insurance company whose sole goal is to break even. Let's further assume a population of five insureds with annual medical expenses as follows:

$      500

$   1,500

$   3,000

$   5,000

$ 10,000

As total anticipated expenses are $ 20,000, when divided by the 5 insureds, the insurance company needs $ 4,000 per person to break even.

If there is no mandate, the person who has no $ 500 of medical expenses and the person who has expenses of $ 1,500 might decide not to renew their coverage. Our pool of insureds would be reduced to three people, with average annual medical expenses of       $ 18,000. To break even, our insurance company must now charge $ 6,000 per person. But at a $ 6,000 premium level, the person with $ 3,000 annual expenses might elect not to participate. This would reduce our population to two insureds with average annual expenses of  $ 7,500. At this point, the person with $ 5,000 annual expenses may elect to drop out leaving only one insured whose premium would be $ 10,000.

This phenomenon, called adverse selection, is why insurance companies, in order to offer insurance to everybody who applies, must have a population of insureds who can not elect to drop out. In a large company which insures all of its employees there are many healthy people paying premiums which enable the company to offer insurance to all, even those with chronic conditions or serious health conditions. The healthy people are in effect subsidizing the unhealthy people. (Note to healthy people: some day you will be among the ranks of the unhealthy.) In a universe where healthy people have the ability to opt out, the population of insureds skews less healthy which causes premiums to increase. These increased premiums in turn cause others to drop out resulting in an endless cycle of more uninsured people and even higher premiums. Put simply, absent full participation, the whole structure collapses of its own weight. This is the situation in which we currently find ourselves.

In a no mandate universe the people who are insured are actually subsidizing the people who are uninsured. Hospitals and doctors raise their fees and charges to compensate for the free care they are obliged to give and the people who don't pay their bills. Most counties and large cities have hospitals which must, by law, treat everybody, insured or not. These hospitals are compensated by the counties, cities and states. These governmental entities use funds generated from taxes to provide the compensation. In other words, no one is unable to get care.

Most uninsured people do not seek care until their conditions have deteriorated. Emergency room waits can be interminable, follow-up care is sporadic and patients may lack the funds to pay for necessary prescriptions. It is not uncommon for intermittent untreated chest pain to escalate to a massive heart attack or a debilitating stroke. What could have been avoided by a doctor visit and an inexpensive generic blood pressure medication becomes a major expense for which we all pay. Were there a health insurance mandate the patient would have seen a doctor, acquired the prescription and avoided the life-threatening event, all at a lower cost to himself and society. Estimates vary from 18,000 to in excess of 100,000 American deaths per year caused by lack of health insurance. These estimates omit the people whose lack of coverage causes them to become permanently disabled (we pay for that too through Social Security disability benefits), partially disabled, permanent financial burdens on loved ones with severely diminished quality of life.

In our current health care environment, insurance companies will not insure people with serious health conditions. People with less serious conditions can buy insurance with their conditions excluded from any coverage or, occasionally at a much higher cost. These people can be insured under large group insurance plans where evidence of insurability is not required. They must accept whatever insurance plan the employer purchases. (Insurance companies are often blamed for providing poor coverage when the fault actually lies with cost-conscious employers.) Many people are stuck in jobs they hate because they are loath to surrender their insurance. Non-healthy people who are laid off have the option to purchase an 18-month COBRA policy; after COBRA expires they become uninsured.

Insurance companies face a trade-off in a system which requires full participation. They increase their customer base in exchange for accepting risks they would reject in the ordinary course of business. This trade-off occurs in every large group insurance plan. A universal health insurance plan would act as a very, very large group. If properly structured (see Hillary's plan), insurance companies would welcome the increased business; their pricing model would be stabilized as the pool of insureds would remain static. The taxes currently required to subsidize city and county hospitals would no longer be required as there would be (almost) no uninsureds.

A properly structured health insurance scheme must contain, in addition to mandates, a mechanism to ensure that no applicant may be rejected by an insurance company and a cap on premiums paid by insureds. To insure viability that premium cap must be expressed as a percentage of income. (Hillary's plan anticipates this cap being set at more than 5% but less than 10% of income.) While 5-10% of income may seem excessive to some, many are now paying a greater share of their income for health insurance. This is often in the form of a "fringe benefit" paid by one's employer. In a properly structured, non-employment based plan, equivalent compensation would be substituted for the fringe benefit by the employer. This additional compensation would be used by the insured to pay his (capped) premium. Insurance premiums could be deducted from the increased compensation in much the same way as FICA taxes are currently deducted. There would be no need to "garnish" wages as detractors have warned. People without income would of course pay 5-10% of nothing. Everyone would be covered and all the virtues described above would be realized.

Without a mandate we are consigned to extend the life of the current unsustainable system. Premiums will continue to rise at hyper-inflationary rates. Businesses will continue to drop their group insurance policies. More people will join the ranks of the uninsured. Taxes will rise to pay hospitals for uncompensated care. Insured people are already paying for covering the uninsureds. Mandated coverage is a necessary corrective to these problems.