Paul Krugman has used the three legged stool analogy to describe the ACA several times. It is an analogy that is vivid in its description and useful in its implications:
Yes! The Court (minus the three stooges) understood that the ACA is designed to work via the “three-legged stool” of guaranteed issue and community rating, the individual mandate, and subsidies. All three elements are needed to make it work, which is why it was obvious to anyone who paid any attention that the lawsuit was nonsense.
There is a problem with this analogy. It is too specific.
There are three legs of the stool. Two can stand without modification. Guarantee issue with community rating stands as a firm leg. It means that anyone can get a policy at a standard rate. In the ACA, that standard rate is based on the county or zip code of residence and age of the applicant. Subsidies also are a firm leg. They help people who can not afford the standard rate pay for the standard rate.
The third leg of the stool is a pool participation mechanism. The individual mandate is a specific type of the third leg. There are other mechanical techniques that can fundamentally perform the same needed function of getting people who think that they will be relatively healthy and low utilizers into the insured risk pool. 100% subsidy for the premium and auto-enrollment with an opt-out performs the same function as the mandate in getting healthy people in the pool. It would force a lot more healthy people into the pool at a higher expenditure for a given level of actuarial value coverage. Late enrollment penalties like those used in Medicare that are long lasting and significant are another approach to get healthy people in the current period into the pool. Multi-year contracts that extend the zone of uncertainty and risk theoretically perform the same function.
All of these techniques are ways to minimize the cost gap between not being covered at all and being covered at a minimal level while participating in the pool. They attack the same problem from a variety of angles but they are functionally similar to each other.
So the actual three legged stool of the ACA is community-rated guarantee issue, subsidies and pool participation mechanism. Keep this in mind as we again talk health reform over the next year.