Scenario: Asymmetric Information and Health Insurance Please label the top of your response with "Extra Credit" if you will be completing this question as your extra credit question. Arguably, one of the most important aspects of the 2010 Affordable Care Act (ACA or colloquially Obama Care) was the Individual Mandate. The Individual Mandate required that most people, with certain exceptions, were required to hold health insurance. Those that refused to hold insurance were charged a yearly penalty. Those who were too poor to afford insurance were provided with subsidies or, in some states, exempt from the yearly penalty entirely. The intent of this mandate was to broaden the "risk pool" - the group of individuals whose medical cost are combined to determine premiums - for insurance companies. Since the risk of insurance payout would be spread over a larger range of the people, this should lower premiums for everyone, especially high-risk individuals. Detractors of the individual mandate argue that it is essentially a "tax" on the poor that are unable to afford health insurance and must incur the penalty. They also argue that the mandate requires healthy individuals to bear the cost of high-risk individuals as premiums are spread across the risk pool. Proponents of the individual mandate argue that subsidies provided to low-income individuals offset any additional cost they might incur while also providing them with health coverage.

Scenario: Asymmetric Information and Health Insurance Please label the top of your response with "Extra Credit" if you will be completing this question as your extra credit question. Arguably, one of the most important aspects of the 2010 Affordable Care Act (ACA or colloquially Obama Care) was the Individual Mandate. The Individual Mandate required that most people, with certain exceptions, were required to hold health insurance. Those that refused to hold insurance were charged a yearly penalty. Those who were too poor to afford insurance were provided with subsidies or, in some states, exempt from the yearly penalty entirely. The intent of this mandate was to broaden the "risk pool" - the group of individuals whose medical cost are combined to determine premiums - for insurance companies. Since the risk of insurance payout would be spread over a larger range of the people, this should lower premiums for everyone, especially high-risk individuals. Detractors of the individual mandate argue that it is essentially a "tax" on the poor that are unable to afford health insurance and must incur the penalty. They also argue that the mandate requires healthy individuals to bear the cost of high-risk individuals as premiums are spread across the risk pool. Proponents of the individual mandate argue that subsidies provided to low-income individuals offset any additional cost they might incur while also providing them with health coverage.