Today in my risk management course at Baylor University, I showcased an article entitled “Tough Questions Dog Health-Care Overhaul”. Specifically we determined that the correct answer to the question “Should individuals be required to buy insurance?” is yes. The context for this answer is that mandated coverage would need to be compulsory in order to force the level of inter-class subsidies (going from healthy people who overpay to sick people who underpay) that would be required in order to prevent substantial adverse selection in which only the sickest people buy coverage. There are tremendous efficiency losses from such a requirement, but I don’t see, given the theory of adverse selection, how a system such as Team Obama has proposed can possible be financially viable without such a requirement. I would add that there are any number of other ways one can expand coverage to people without having to bear such high adverse selection costs. For example, some type of expansion of the current version in which we continue to rely primarily upon private markets supplemented by separately capitalized state run risk pools would probably be far more effective in terms of expanding coverage as well as mitigating moral hazard and adverse selection.