"Why the sick, of all people, would drop in and out of the system, makes no sense. The point the CBO was making is that the insurance companies would find ways to cherry pick their customers, leaving the PO as the plan of last resort."

There was a University of Chicago economist on Planet Money this summer sometime who pointed out that there is an ignored but growing informational disadvantage in the insurance marketplace. Individuals can now do personal genetic testing with kits at home that they send to private labs for analysis. Rationally, the results will impact the level of coverage you get and thus cut into the insurance profits. Biomedical trends are likely to exacerbate this over the years.

The professor's conclusion was (against his personal ideology) we should go to single payer universal healthcare.