It is basically the position of the Obama administration that the group health insurance market currently “works.” Administration officials have repeatedly stated things to that effect, and this is why the Affordable Care Act doesn’t change much about the group market. This creates a logical problem for the administration when it tries to argue that the individual mandate for the individual market can’t be severed from the ACA’s main new consumer protections, such as guaranteed issue and community ratings.

These consumer protections are already common in much of the group market, but the group market doesn’t currently have an individual mandate, even though it still “works.” The experience of the group market proves it is not the individual mandate that prevents an insurance death spiral; it’s the subsidies.

The way most of the group market works is that employers in effect offer employees the chance to buy highly subsidized health insurance.  The subsidy comes from the fact the tax code makes employer-provided health care benefits tax free. If an employee elects to take the employer-provided health insurance, they get insurance; if they don’t choose the insurance, they lose the value of that benefit.

For the most part these subsidies/employer contributions are large enough it make financial sense for the vast majority of people to accept the employer-provided insurance. Even without a mandate the vast majority of employees choose to buy their employer-provided insurance anyway, because the subsidies make it the smart financial move. Very few people try to game this system by not getting their employer insurance until they get sick, thanks to open enrollment periods.

Supporters argue that the individual mandate is the only way to get enough people to buy insurance to make the consumer protections viable, but that requires completely ignoring the supposedly working group market in the United States. The individual mandate just makes it marginally cheaper, but “it is slightly cheaper” is not a very solid constitutional argument.