The plan argues that mandating coverage, focusing on an employer-based system and creating an insurance exchange will pool risk among more individuals of variable health and reduce the overall cost of health insurance. Mandating coverage will usher more health people into the market, reducing overall risk. An employer-based system “naturally” spread risk over a larger population. While the plan does not outline any direct measures to change the current insurance risk pools, it does claim that the proposed Health Insurance Exchange will be capable of adapting the current system to pool risk more cost-effectively. The Exchange will be authorized to ensure that “plans enrolling sicker-than-expected people would not suffer a financial disadvantage compared to those enrolling healthier people.”
The plan combines the non-group and small-group insurance markets in order to reduce overall risk. The plan argues that merging the two markets will reduce premium costs by 24% for non-group members. The plan also argues that an individual mandate will add more healthy individuals to the health insurance risk pool, thus reducing the overall risk and the cost of insurance for not-so-healthy individuals.
The plan does not offer direct measures to reduce costs by pooling risk, but does propose to investigate merging insurance markets in the future. The plan also proposes a non-group market security trust in order to reduce premium costs for non-group members seeking health insurance. However, the state legislature has yet to allocate funds for the trust.
The Obama plan does not outline direct mechanisms to reduce costs by pooling risk. However, it does require insurance companies to cover risky patients at “fair and stable premiums.” The proposed National Health Insurance Exchange, too, would require insurers to offer policies to citizens priced irrespective of health status. The plan also incentivizes an increase in employer-based coverage, which is likely to increase group insurance markets and effectively pool risk.
The Canadian system offers free, universal coverage.