The Affordable Care Act (Obamacare) mandates that everyone buy health insurance or face a penalty. The rationale for this policy is to:
A) solve the adverse selection problem.
B) solve the moral hazard problem.
C) make sure that high-risk people pay higher premiums than low-risk people.
D) ensure that Medicare enrollees pay actuarially fair insurance premiums.

Question

Quizplus · Accepted Answer

The Affordable Care Act (Obamacare) includes an individual mandate to buy health insurance primarily to solve the adverse selection problem. Adverse selection occurs when those most likely to use health insurance (high-risk individuals) are more inclined to buy it, while low-risk individuals opt out, leading to higher premiums and an unsustainable insurance market. By mandating that everyone, including healthy individuals, purchase insurance, the risk pool is balanced, helping to stabilize premiums and ensure the viability of the insurance market.

The Affordable Care Act (Obamacare) Mandates That Everyone Buy Health