There is an obvious alternative to community rating as practiced by Switzerland and Obamacare: require insurers to charge the same rates to those within a specific birth year, regardless of gender or prior health status. The vast majority of the variation in health risk is accounted for by age; eliminating age-based community rating would do much to counteract the incentives for adverse selection that are contained in the Obamacare exchanges. Remember that Obamacare’s individual mandate, the thing that is supposed to force young people to buy overly costly insurance, is quite weak.
In our approach, all 24-year-olds might pay the same rate for actuarially equivalent insurance. But that rate would be much lower than the rate that all 41-year-olds would pay, or that all 62-year-olds would pay. That’s a fairer, less expensive, and more economically sound system than what both Obamacare and Switzerland impose.