This is Kevin Outterson, writing at The Incidental Economist:

If a healthy person doesn’t buy insurance, the average cost of the risk pool goes up. This is unique to insurance markets. If a healthy person doesn’t buy broccoli, the average price goes down.

Answer below the fold.

If the market is allowed to price risk in an unfettered way, a healthy person’s decision to buy to not to buy insurance in no way affects the premium charged to other members of an insurance pool. Each entrant into the pool will be charged a premium that reflects the expected extra cost and risk that person brings to the pool.

A healthy person only helps others in an insurance pool if he is overcharged. If he is charged a premium greater than the actuarial value of his insurance, the extra payment he makes can be used to subsidize everyone else’s insurance and make their premiums lower than the actuarial value of their insurance.

But if all we are doing here is looking for people to plunder so that we can subsidize the premiums of above-average-cost enrollees, why pick on young healthy people? Why not tax old sick people?  Or people who are left handed? Or people with blond hair?

Or here is a novel idea: why not fund the subsidies from the government’s general revenue.

As I have said many times before, I think the IQ drops about 15 points when people start talking about health policy.