There’s a lot to be said for the Affordable Care Act (Obamacare):

• It has reduced the number of Americans without health insurance to a record low. (And it would be even lower had a number of states not screwed themselves by refusing Medicaid expansion funding.)
• It has made it harder for health insurance companies to cancel coverage when someone gets sick or to refuse to sell them a policy in the first place (both of which used to be routine).
• It establishes minimum standards for insurance, so if you buy health insurance you actually get health insurance.
• It requires insurers to cap the total amount customers pay in a year rather than limiting what the companies pay while leaving sick people on the hook for the rest.
• It gives tax credits that for the great majority of people buying individual policies limits their monthly premium to a percentage of their income, and for low-income people it also helps with out-of-pocket costs.
• It gives tax credits to small businesses that buy insurance for their employees. It has also helped reduce the overall growth in medical costs and in spending on Medicare and encouraged improvements in care.
• It improves free-market competition by making companies present their policies in a consistent way so they’re easier to compare.
• It has encouraged hospitals to implement patients safety improvements that have so far saved tens of thousands of lives.
• It has extended the solvency of the Medicare Trust Fund, cut the federal budget deficit, and expanded Medicare coverage while helping slow the overall rise in healthcare costs.

But it has its problems. Because the tax credit cuts off sharply at a given level of income, a small rise income could leave someone much worse off. In parts of the country premiums have risen quite a bit and next year are expected to make some even bigger jumps, though despite that, premiums actually remain lower than the Congressional Budget Office had originally projected.

The biggest problem is that too many healthy people choose to go without health insurance, making a bet that they won’t get sick and if they do, somebody else will bail them out. Some people may simply be clueless about how much some illnesses can cost — tens of thousands of dollars per dose for some cancer drugs for example. And some may be naive enough to believe that they simply won’t get sick, or figure they’ll just wait to buy insurance until they’re sick.

The evidence is that the insurance companies aren’t just being greedy; they really are losing money in many places because people with individual policies tend to need and use a lot of care. This forces them to raise their rates unless more healthy people can be convinced to sign up for coverage. And higher rates make it hard to get more people to sign up.

This is the freeloader problem that the so-called individual mandate was intended to prevent, by requiring most people to carry health insurance one way or another or else pay a special tax (sometimes labeled a “fine” though the amount depends on one’s income and it’s computed and paid with one’s tax return). Unfortunately, the additional tax can than most coverage, even taking into account the additional tax credit most people get if they buy their own coverage out of pocket, so a lot of people just pay it rather than buy insurance.

The simplest solution: Raise the additional tax amount to what it would cost to give them Medicare, and given them Medicare, just like people over 65 have. Give them the same tax credit they’d get for buying a private policy through an exchange. There would be no new government programs created. Just about everyone would be insured one way or another. General taxes wouldn’t have to go up. People would still have a free choice of public or private coverage, which would compete on a level playing field. In a rational world, this really ought to make everybody happy except for irresponsible people who want to go without insurance and shift the risk to the rest of us.

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