The laughingly mis-named "Affordable Care Act" (ACA), enacted in 2010, included provisions such as “Guaranteed Issue” and “Community Rating,” designed to ensure that all individuals have access to healthcare regardless of pre-existing conditions or risk factors. Imagine a scenario where these principles are applied to the realm of car insurance. While there are potential benefits, (if you give something away, someone always benefits), these are far outweighed by serious deficits that would destabilize the industry, burden responsible drivers, and distort consumer behavior. Sound familiar?

“Guaranteed Issue” mandates that insurers must offer coverage to all applicants, regardless of their risk profile. This would mean that all drivers -- including those categorized as high-risk, such as young drivers, those with a history of accidents, or drivers with significant credit issues -- would receive insurance coverage without facing denial. 

“Community Rating” requires that insurance companies charge the same premium for all policyholders within a specified demographic group, disregarding factors like age, gender, driving history, or geography. This eliminates risk-based pricing and spreads costs evenly across the pool. 

While these principles sound equitable, they undermine the very foundation of insurance: pricing risk according to likelihood of loss. Under the current system, premiums reflect individual risk. High-risk drivers pay more, while low-risk drivers benefit from reduced rates. Community rating disrupts this balance: 

*Low-risk drivers are penalized by higher premiums, effectively subsidizing high-risk drivers.

*High risk drivers are rewarded with artificially low premiums, reducing incentives to improve driving behavior. 

*Overall costs rise as insurers must spread the financial burden of frequent claims across the entire pool.

Graphic: Social Media Post

In Obamacare's health insurance exchanges, premiums rose for healthier individuals who realized they were subsidizing sicker enrollees. Subsequently, many younger, healthier Americans opted out despite penalties, creating what economists call "Adverse Selection" -- a shrinking pool of low-risk participants and rising costs for everyone else. 

Guaranteed Issue and Community Rating erodes insurers' ability to manage risk effectively:

*Profitability declines as companies are forced to cover high-risk drivers without adequate compensation.

*Smaller insurers begin to collapse as they are unable to absorb losses, leading to market consolidation and reduced consumer choice.

*Innovation stalls as insurers shift focus from risk management to survival, weakening incentives to develop better pricing models or safety programs.

This is precisely what is occurring with Obamacare -- several insurers withdrew from state exchangesafter incurring heavy losses, leaving consumers with fewer options and sometimes only a single insurer in their region. 

These factors could also unintentionally encourage risky behavior: 

*Moral hazard increases as drivers who know they cannot be denied coverage may take greater risks, leading to more accidents.

*Guaranteed Issue could result in someone waiting until they have a car accident to sign up for insurance, and receive coverage after the fact.

*Low-risk drivers, frustrated by inflated premiums, may opt for minimal coverage or even drive uninsured.

*Safe driving habits lose their financial reward, weakening incentives for responsible behavior.

This parallels the Obamacare debacle: when healthier individuals dropped coverage, the remaining pool skewed toward higher-cost patients, driving premiums upward in a vicious cycle. 

While it's noble to attempt to provide insurance coverage for all, the deficits of Guaranteed Issue and Community Rating are significant:

*Uninsured driving will likely rise as low-risk drivers exit the system.

*Public safety will likely decline with more high-risk drivers on the road and fewer financial consequences for poor driving. 

*Equity clashes with sustainability, as fairness in access undermines affordability and stability.

The Obamacare catastrophe shows that without mechanisms like the "Individual Mandate" or subsidies to keep healthier people enrolled, the system collapses. Car insurance would face the same dilemma: how to keep low-risk drivers in the pool when they're being overcharged.

Obamacare's principles of "Guaranteed Issue" and "Community Rating" highlights the tension between fairness and functionality. While they expand access, they erode the risk-based foundation of insurance, leading to higher premiums for safe drivers, financial strain on insurers, and distorted consumer behavior. These deficits -- ranging from affordability crises to market instability -- mirror Obamacare's struggles with adverse selection, insurer exits, and skyrocketing premiums.

Insurance works by aligning cost with risk. When that alignment is stripped away, it creates a system that is neither fair nor sustainable. In other words, a typical Democrat plan.