The Supreme Court’s ruling should be out very soon on the Affordable Care Act. If they overturn the individual mandate, you will hear terms like death spiral & adverse selection.
A death spiral is where the healthy people leave the insurance market and there are only sick people left. This would increase premiums and the Insurance industry would have a hard time staying in business.
If the mandate is overturned there are a couple reasons why the insurance industry might stay in business.
The first one is a tax subsidy. If the Federal Government is paying a portion of the premium it could be affordable for most people. Then the insurance pools would have some healthy people to try to offset the high utilization people.
The second one is aged base premium. This is where the premium is based on age. The 20 something’s, would have a lower premium than the 60 something. The theory behind this is the young people are less likely to have claims.
It all comes down to price. If the premium is affordable then people might join the ranks of being insured. If the premium is more than rent or a mortgage payment people will not buy.