June 7 2013

ObamaCare's Young and Restless

Hadley Heath

The past couple of weeks have seen a revisitng of one of ObamaCare's promises: that it would lower premiums.

The President and supporters of the law promised that the average family premium would decrease by $2500.  To be fair, although the law was passed over three years ago, most of its key components don't take effect until next year (2014).  

The promise that the "average family premium" would decrease by $2500 certainly insinuates that most people will see a dropoff in their health insurance costs, but as smart policy wonks point out, there is one group of people who can count on getting a raw deal: the young and healthy.

Today in the Orange County Register, Grace-Marie Turner makes this point loud and clear:

About two-thirds of the uninsured are younger than 40. They use fewer health services, and their premiums are needed to help keep insurance costs down for everyone else.

Yet the incentive structures in the law work at cross-purposes with this goal and could well undermine its success. It will all come down to costs.

Four out of 5 people younger than 30 will face higher premiums than without the Affordable Care Act even with the subsidies many can receive.

Then Turner explains the consequences:

If young people don’t sign up, the insurance pools are likely to be composed primarily of people who have high health costs. This could cause a “death spiral” where many more older — and sicker — people are enrolled, causing health insurance premiums to rise to cover their medical costs, thereby driving even more young people out of the market.

This is the basics behind ObamaCare and illustrates the necessity (at least from the policy point of view) for the law's individual mandate.  The deal isn't a good one... Otherwise there would be no need to force people to buy into it.

It's simply common sense: If ObamaCare is more and better insurance for more people, then how could that possibly cost less?  It's not a question of whether prices will go up; the question is who pays.

Now ObamaCare supporters want to backtrack and reverse their position.  When Pelosi said, "Everybody will have lower rates," she clearly wasn't thinking of America's youth.  

But who can blame her? She was waiting on the law to pass so she could find out what was in it.

 

 

 

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