Anyway, I saw him crop back up in a discussion of Health Care, and he wrote one of the best, simplest explanation for the Individual Mandate that I've ever read.
So this is the work of NC Steve 3.0 on TPM (real name unknown). Hat's off to you, Steve!
Insurance only works if the amount of income from premiums at least equals benifits+admin and overhead cost+(if the insurer isn't a non-profit) profits ("payout"). If payout exceeds income, the insurer collapses into bankruptcy and everyone is screwed.
In a group plan, income and payout are balanced because participation is not voluntary--good risks and bad risks alike will be in the plan, paying premiums, or having them paid for them by their employer. (I cannot opt out of my firm's plan and ask them to give me the money they give BSBC of NC. If I "opt out," the boses simply puts my premium in their own pockets, so of course, I participate).
In the individual market, however, participation is entirely voluntary and the money is actually coming out of the insured's own pocket. This means that sick people want insurance and healthy people, especially the young ones who think they're invulnerable and immortal, don't. In that market, insurers keep income and payout balanced by trying to avoid insuring people who are statistically more likely to need benefits (people with preexisting conditions) and by trying to revoke the policies of people who make claims on the grounds that they lied to them about what a terrible risk they were.
The law forbids insurers to deny or revoke. That means they will, by defintion, be insuring people who will increase the payout. Without a mandate, healthy people can just sit it out unless and until they are injured and sick, at which point they sign up, which means there will be no corresponding increase in income.
The point of the mandate is to make the economics of the individual market work the same way the economics of a group plan work. Without it, non-group plans collapse and everyone is screwed.
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