The individual mandate may collapse health reform.

The individual mandate will get interesting. The argument is that if we get more young, healthy people in the insurance pool, we spread the risk and we’ll be able to better “cover society’s medical bills." 

However, it gets more interesting. When people are laid off and offered COBRA (not mandated), only about 19% of people purchase it:

That number doubles with subsidies. But these numbers are relevant to today’s insurance prices. Health insurance premiums double every eight years— when the mandates go into effect in 2014, the average premium will cost roughly $14,000. So, I predict that only about 15% of people, when mandated, will actually purchase health insurance. 

So let’s run the numbers. Let’s say out of the 50 million uninsured people here in the US, about 35 million are legal and required to purchase health insurance:

35 million x 15% = 5.25 million people will be newcomers actively contributing to the pool. Now let’s say those 5.25 million people will each pay $7000 out of their own pockets into the pool with subsidies. This adds about $36 billion into the nation’s insurance pool. That will be a little over 1% of healthcare costs in America.

We spend $280,000,000 an hour on healthcare in America. Therefore, this new pool will buy us about 131 hours of healthcare in America.

That’s called crying in the ocean of overwhelming healthcare costs.

Take this with a grain of salt…lots of assumptions here. But the real issue is that there’s going to be a very easy decision for the vast majority of people in 2014:

$14,000 insurance premium I never use or $800 fine?

The individual mandate may collapse health reform.