How Obamacare
Sticks It to Young Americans
“Lower costs for young adults.” — OFFICIAL OBAMACARE FACT SHEET, “HOW HEALTH
INSURANCE REFORM WILL HELP YOUNG ADULTS,” WHITEHOUSE.GOV
“Now, if you don’t have health insurance … [Obamacare] will finally offer you quality,
affordable choices.” — BARACK OBAMA, TO UNIVERSITY OF MARYLAND STUDENTS, 9/17/09
Oh, never mind. When Obama was selling the (Un)Affordable Care Act, he made multiple splashy visits to college campi — bringing two promises to young people. First, that a
parent’s health insurance policy would henceforth cover “children”
under the age of 27. Second, that Obamacare would lower the cost
of individual health care insurance for young people.
The first has been a “success,” but for all the wrong reasons.
Thanks to the disastrous job market for those 24 and under — 49.8
percent of whom were jobless in summer 2012, according to BLS figures — young people are more dependent on their parents than any
generation in American history. To the Regime, that’s apparently a
wonderful thing. HHS Secretary Kathleen Sebelius frequently crows
about the over 3 million adult “children” who are now covered
under a parent’s policy, thanks to Obamacare. (What next? Force
them to be treated by their pediatricians?)
The second promise — that Obamacare will mean a reduction in the cost of health care for young
people — has been a monu-mental failure.
Full-blown Obamacare doesn’t even kick
in until January 2014, but the verdict is
already in. Obamacare is a turkey, but it’s
young, healthy Americans who are being
served up on a platter.
Hundreds of pages of new Obamacare regs that were rolled out
in November provide the first glimpse of the catastrophe about to
unfold. Starting on October 1, 2013, according to The Huffington
Post, individuals who are not receiving health insurance from their
jobs will be strong-armed into purchasing individual insurance from
state health insurance exchanges. (That is, if their state is participating; 23 states have already declared they are not. The feds take over
in these states.)
According to health care expert Grace-Marie Turner in National
Review, two provisions in these new regs are largely to blame for the
staggering premium cost increases for young adults:
Community Rating. Young people consume far fewer health
care dollars than older folk, and are thus much less expensive to
insure. According to Avik Roy in Forbes, insuring the average
18-year-old, for instance, costs one-sixth the cost of insuring a typical 64-year-old. In insurance circles, this is referred to as an “
experience rating.” It means that a 64-year-old buying an individual policy
could pay as much as six times for insurance as would an 18-year-
old, or 6:1, although many states restrict this “age band” to 5:1.
The age-band concept has been used for decades by insurers to
discount policies for the young due to their reluctance to buy insurance. According to a 2009 analysis by management consultants
Oliver Wyman, “a substantial number of young individuals do not
purchase coverage even at premiums that are often under $100
per month … Too often young people think they are healthy and
invincible and do not need insurance.” Everyone in the industry
understands incentives are critical in order to attract sufficient numbers of young policy-holders because “a sustainable insurance market
requires broad participation” of healthy people to help offset costs to
care for the very ill.
Obamacare, however, jettisoned the insurance industry’s time-tested “experience rating” system in favor of a utopian-scheme
“community rating” provision. This requires health insurers to “level
out” premiums so young people pay more and older people pay less.
Completely bass-ackwards. “Obamacare, in a sop to AARP,” notes
Avik Roy, “requires that insurers only charge three times as much to
their costliest beneficiaries what they charge to their least-costly ones”
— an age band of 3:1. Older Americans will be getting a 13 percent
subsidy, and young people will pay through the nose — and every
other orifice. Oliver Wyman estimates an insurance rate hike of 45
This is a shell game being run on the
young by liberal con artists.
percent for the 18-24 year age bracket, which is bad enough, while
Roy puts the increase at a horrifying 75 percent.
When that happens, the sound you hear will be young Americans
stampeding away from buying health insurance. According to Oliver
Wyman, the 3:1 age band will cause more than 500,000 to drop
coverage and join the ranks of the uninsured.
It’s as predictable as the day is long: why would a healthy 25-year-old man spend thousands per year for health insurance if he rarely goes to the doctor? Even if he adds the federal penalty for not buying health insurance ($95 in 2014; $325 in 2015;
$695 in 2016), he’s still saving money. Besides, he knows that if
the unthinkable happens — he’s injured or develops a serious illness — he can always buy insurance later. Because no one with
pre-existing conditions can be rejected. A notion that sounds so
compassionate and beautiful — until it collapses the whole house
of cards.
So, what will happen when all these healthy young people
eschew health insurance? Older people will face far higher premiums than they ever did under the old “experience rating” health
insurance. It’s the perfect recipe, according to Roy, for an adverse
selection death spiral. More and more healthy people leave the
insurance market, leaving only the very sick behind to pay skyrocketing premiums. An Obamacare manufactured crisis.
The Limbaugh Letter Premium
