Final answer:
Open enrollment requires insurers to offer plans without price discrimination. The ACA mandates health insurance to prevent adverse selection and spread costs. It uses subsidies and mandates to encourage a sustainable insurance market.
Step-by-step explanation:
The question pertains to a period known as open enrollment, during which an insurer must offer any plan it sells to consumers without charging more based on health status or other factors. This concept is pivotal to the workings of the insurance market, especially in light of the Patient Protection and Affordable Care Act (ACA), often referred to as Obamacare.
The ACA aimed to reduce the problem of adverse selection by mandating the individual purchase of health insurance, thus including healthier individuals in the risk pool and spreading out the costs of insurance more evenly among all insured individuals.
To explain in 200 words, the government cannot compel insurance companies to provide insurance at losses. This would mean setting premiums below an actuarially fair level for high-risk groups, which would necessitate other groups to offset this difference. Those groups are either taxpayers or other insurance buyers.
Instead, the health insurance industry has to find a balance where risk is adequately assessed, and premiums are set at a level that ensures viability. To address issues with high risks and adverse selection, the ACA includes provisions that both mandate insurance purchase and offer subsidies to make it more affordable, thus encouraging participation from lower risk individuals as well as higher ones.
By broadening the insurance pool, including subsidies, and mandating the purchase of insurance, the ACA aims to manage the balance needed for a viable insurance market—one where pricing remains fair, coverage is accessible, and the industry can function effectively without incurring losses due to regulation.