Over at Kaiser Health News Roni Caryn Rabin made the argument that the reason New York insurance rates are dropping so dramatically is because of the individual mandate. Here is what she said:

The nosedive in health insurance prices that New York officials announced earlier this week was driven by many factors, but the most important was the individual mandate, a central component of Obamacare.

Arguably the poster child for the Affordable Care Act and the Individual Mandate has to be Massachusetts health care system, so let’s look at their experiences. Back in 2011 Austin Frakt pointed out in “The individual mandate: Evidence from Massachusetts” that the “mandate did the job it was designed to do”. I pointed out in a comment that this success did not translate into lower insurance rates in the individual health insurance market.  When I entered my demographic data into the Health Connector for Massachusetts in 2011, http://www.mahealthconnector.org, the lowest Bronze plan available would cost me $1,296 per month. When I looked up comparable plans on http://www.ehealthinsurance.com for Ohio and it costs me $305 per month. In fact there were 15 plans available for less than $400. It is interesting to note that Ohio seems to have a lot more competition than the states whose health insurance regulations look most like the Affordable Care Act, Massachusetts and New York. From the Massachusetts experience we can conclude that the individual mandate has not been a significant factor in reducing the cost of the health insurance in Massachusetts. In John McDonough’s article, “Does Massachusetts Have the Nation’s Highest Health Insurance Premiums? It Depends.”, he argues that the higher cost for Massachusetts is primarily the result of higher household income. A cynical person might conclude that Massachusetts is paying the highest rates it’s population will bare without screaming. What the Massachusetts experience has shown us is that the Affordable Care Act and in particular the Individual Mandate will drive the premium costs in the individual market upward to the rates paid by the large group plans and we are not going to know why. Are the higher rates because of the individual mandate, higher household income like they have in Massachusetts, or less competition as a result of more regulations like they have in New York and Massachusetts? The ironic part is that none of these reasons for higher rates are likely to result in better health care outcomes for the general population. So if you purchase health insurance in the the individual market you are confronted with the painful dilemma. Your health insurance rates will soar out of control if the individual mandate does not work or your health insurance rates will go up probably up to the point where they are barely affordable if the individual mandate does work. In either case you lose. The best solution is for us to go back to the system we had before the Affordable Care Act and think up a more equitable single payer system to pay for guaranteed access.

I wrote this comment to Dan Mitchell’s post, “Question of the Week: Will Obamacare Collapse?”

I think the Affordable Care Act will collapse because our government bureaucracy has finally found a law so complex and convoluted that they cannot translate it into workable government programs. Although I would enjoy a dramatic "Release the Kraken" collapse of the Affordable Care Act I am afraid we are destined to endure a "Erma Bombeck" type collapse. One day we will look at our newly planted garden and realize that the green stuff growing out there is just weeds and that may be we should restrict our future experiments in gardening to the vegetable section of the grocery store. The Affordable Care Act is just a bunch of weeds in our health care garden and no amount of weeding by our government bureaucracy is going to make it work better than our existing health care system. Ultimately the law fell prey to the main instigators of economic entropy, Murphy’s law and the Peter Principle. So let me count the ways the Affordable Care Act has failed us.

1. A remark by Juan Williams reminded me that there is an easy alternative to the Affordable Care Act. As a healthy person who purchases their health insurance through the individual market, I was better off with the health insurance I got before the Affordable Care Act. I can safely say that I would be much better off if the Affordable Care Act quietly disappeared. So I am quietly rooting for Team Murphy to triumph.

2. Although many people complain about the Individual Mandate there are very few people who can explain how this arbitrary method of cost shifting is better than the existing system. The problem is how does society pay for the health care of those who are uninsured and chronically ill. The Affordable Care Act solution is spread these costs over the smallest insurance group market, the individual health insurance market. In comparison the existing system is far more equitable since it spreads the costs over a larger population. When we realize that we are sacrificing one of our freedoms so that we can implement a less equitable cost sharing method, we come to the inevitable conclusion that the person who crafted this part of the law was in over their head. Way to go Peter!

3. The big question in 2014 is what will a bronze level plan cost? Will it cost closer to the individual market rate of $5,000 for a family or the large group rate of $15,000? There are several unions having a panic attack right now because they think it will be closer to $5,000. Businesses look at this price as a golden opportunity to dump their employees into the exchanges and get out of the health insurance business. I realize the long term goal for businesses was to get out of the health insurance business but I do not think the unions or businesses expected it to happen this quickly. This is as close to a "Release the Kraken" moment we are going to get. Chalk this one up to Team Murphy!

4. The employer mandate has been delayed for at least one year and Ezra Klein is arguing that the employer mandate shouldn’t be delayed, it should be repealed. If there is no employer mandate, the Affordable Care Act becomes an even a bigger mess to implement. One of the reasons some businesses were lobbying for Medicaid expansion was to reduce the size of their employer mandate penalty. I suspect they are no longer interested in Medicaid expansion. Good luck with that Medicaid expansion. Chalk this one up to Team Murphy!

5. So let’s not forget this Heritage Foundation list.

1. The CLASS Act: ABANDONED, THEN REPEALED

One Democrat famously called this new long-term care entitlement “a Ponzi scheme of the first order, the kind of thing that Bernie Madoff would have been proud of”””and so it proved. In the fall of 2011, the Department of Health and Human Services (HHS) admitted CLASS could not be implemented in a fiscally sound manner””and Congress eventually repealed the program outright.

2. Exchanges: MISSED DEADLINES

Most states resisted Obamacare’s call to create insurance exchanges, choosing to let Washington create a federally run exchange instead. However, a Government Accountability Office report released last month noted that “critical” activities to create a federal exchange have not been completed, and the missed deadlines “suggest a potential for challenges going forward.”

3. HHS mandate: DELAYED; UNDER LEGAL CHALLENGE

Last year, the Administration announced a partial delay for Obamacare’s anti-conscience mandate. However, many employers have filed legal actions against the mandate, which forces them to fund products they find morally objectionable or pay massive fines.

>>> Get the latest on Hobby Lobby’s case against the HHS mandate

4. Small business plan choice: DELAYED

The Administration announced in April that workers will not be able to choose plans from different health insurers in the small business exchanges next year””a delay that liberal blogger Joe Klein called “a really bad sign” of “Obamacare incompetence.”

5. Child-only plans: UNINTENDED CONSEQUENCES

A drafting error in Obamacare has actually led to less access to care for children with pre-existing conditions. A 2011 report found that in 17 states, insurers are no longer selling child-only health insurance plans, because they fear that individuals will apply for coverage only after being diagnosed with a costly illness.

6. Basic health plan: DELAYED

This government-run plan for states, created as part of Obamacare, has also been delayed, prompting one Democrat to criticize the Administration for failing to “live up” to the law and implement it as written.

7. High-risk pools: UNDERPERFORMING; FUNDING LOW

This program for individuals with pre-existing conditions faced higher costs and lower enrollment than advertised. Though it was originally projected to cover up to 700,000 individuals, only about 110,000 have enrolled””yet the Administration had to halt new enrollment and take other radical measures to prevent the $5 billion program from running out of money.

8. Early retiree reinsurance: BROKE

The $5 billion in funding for this program was intended to last until 2014””but the program’s money ran out in 2011, two years ahead of schedule.

9. Waivers: UNINTENDED CONSEQUENCES

After the law passed, HHS discovered that some of its new mandates would raise costs so much that employers would drop coverage rather than face skyrocketing premiums. Instead, the Administration announced a series of temporary waivers””and more than half the recipients of those waivers were members of union health insurance plans.

10. Co-ops: DEFUNDED

Congress blocked additional funding to this Obamacare program in January, and with good reason: In one case, a new health insurance co-op was called “fatally flawed” by Vermont’s state insurance commissioner.

11. “Employee free choice”: REPEALED

This provision, which would have allowed certain workers to use contributions from their employers to buy exchange health plans, was repealed in April 2011, as businesses considered it too complex and unworkable.

12. Medicaid expansion: REJECTED BY MANY STATES

There is a good reason for the unions to come out against the Affordable Care Act. With ACA health exchange rates this low, the thump-thump sound you are hearing is the sound of the bus running over the unions. If unions have to choose between maintaining union membership or embracing Affordable Care Act, the choice for unions is simple.

At the end of April Kaiser’s Subsidy Calculator estimated that individual health insurance would cost $8,137. I ran the calculator today on a single adult earning $60,000 and the premium for a “silver” plan is estimated at $3,018. Now if use the $205 per month amount quoted in cost in Avrik Roy’s Rate Shock article for a “bronze”  plan, it is $2,460 in California. Are health insurance rates that much harder to calculate than temperatures from tree rings?

The Affordable Care Act did not create the divide between the healthy and the unhealthy, it drove the wedge deeper. The healthy have always paid for the unhealthy but the costs have been spirally out of control for the last thirty years. Out of control health care costs was and still is the primary reason for health care reform. The Affordable Care Act took a different tack to fixing the health care problem. It decided that the only health care reform issue that was going to be addressed was an expansion of our chronic care system and this expansion would be accomplished by increased cost shifting. The key cost shifting policies implemented by the Affordable Care Act were to ban pre-existing conditions, use community rating to level out insurance premiums between age groups, to expand Medicaid, and to use a one size fits all approach to health insurance plans. As long as third party payer system remained intact and paying for the expansion, the goals of the Affordable Care Act were safe. When the healthy people realized that their insurance premiums were going up or their health insurance was being dropped because they were the people paying for expanded benefits, the results were predictable. According to a recent Fox News poll 56% of the people believe that they had a better health care plan before the Affordable Care Act reforms. The Affordable Care Act reforms drove a big enough wedge between the healthy against the unhealthy that the healthy noticed.

The majority of the people in this country are healthy. They are also likely to be skeptical of the argument that cost shifting policies will reduce future health insurance increases. Like most people they do not like to think about health care until it is necessary. Unlike the unhealthy group they are willing to evaluate their health insurance with the same cost to benefit lens they use to evaluate their auto or house insurance if it will save them money. They have concluded that the health care system has failed to fix their problem for twenty years and it is unlikely that the Affordable Care Act will fix it. The unhealthy and poor really do not have a choice about their health care so their attitude to health care is completely different than the healthy. They do not care who pays for the health care as long as they get the health care they want. So we have a group of healthy people who reluctantly care about health care costs and an unhealthy group that does not care at all. It is not surprising that a Rasmussen poll found out that 59% of the people would trade a less expensive health insurance plan for a bigger paycheck.

If they had a choice, 59% of Likely U.S. Voters would choose a less expensive health insurance plan that covered only major medical expenses and a bigger paycheck.

The healthy majority are willing to embrace “common sense” changes and the unhealthy minority do not care. The healthy want more choices that result in lower costs.  If they continue to be healthy, they reason that they should be able to use “their savings” for other high priority items in the family budget. It is their money. The Affordable Care supporters believe these savings belong to society and should be used to expand health care for those unhealthy people who have no choice. Solving this health care issue for the unhealthy is a major part of their world view of the “greater good” for society. In reality they have entered into a shell game with the insurance companies and health care providers to change the source of funds for the chronic care and uninsured patients. It is not surprising that the healthy people group view the “greater good” argument with skepticism. They understand the “greater good” talk, they do not see the “greater good” walk. To the healthy we have a health care cost problem and the problem with the unhealthy will not be solved by throwing more money at it. It will require a different type of health care reform than the Affordable Care Act. This health care reform has to be smarter about the health cost games being played by insurance companies and health care providers, increasing health care competition, and less focused on raising revenue. It is a regulatory environment that looks like it lends itself more to the state control than the federal control. This leaves the Affordable Care Act supporters with the “Jerry Maguire” dilemma if they want the Affordable Care Act to survive. Do you continue to argue that Affordable Care Act reforms are part of the “greater good” for society despite being significantly more expensive for the healthy or do you embrace your job as agent to the people and start showing them some results they can see in their wallet? Show me the money!