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  • Welcome to the Real World: Grim Prospects for Young Adults under Obamacare

    Individual mandates cause headaches.

    As the Obama Administration’s allies are gearing up to spend $125 million over the next five years to sell the health overhaul law to the public, including seniors, there has been a noticeable vacuum in the discussion over the impact on younger adults. This topic was in the spotlight at a recent event sponsored by the CATO Institute: “How Will Obamacare Affect Young Adults?”

    While the President received one of the largest margins of support from 18-29 year old voters during the 2008 election, there is growing skepticism over the President’s handling of health care and the final version of the bill signed into law. Under the overhaul, Michael Cannon, Director of Health Policy Studies at the Cato Institute, says that flawed policies are used to fix other flawed policies. For example, for price controls to work, an individual mandate is required; but for a mandate to work, more taxpayer subsidies are necessary. But what happens when the central planners’ calibrations are off?  Younger and poorer adults who stay in the health insurance market will be cross-subsidizing the premiums of older and wealthier Americans not yet eligible for Medicare. From the “have nots” to the “haves”—a new social policy.

    With insurance price controls set by regulation, premiums for young adults will increase. Then what? They will find it financially advantageous to drop coverage and pay the modest mandatory government fine instead. Multiple reports have estimated anywhere from 17 to 50 percent premium increases for young adults. Of course, as noted, these are the same individuals making the least amount of money in their career and struggling financially. CATO estimates that single young adults could save up to $3,000 a year by dropping coverage and for a young family, $8,000 for a family of four. If younger and healthier individuals leave the coverage pool, only the older, sicker, and more expensive patients will be left. Then what?  Insurers will have no choice but to raise premiums to cover higher-benefit older adults, forcing even more individuals to drop coverage. This creates a “death spiral” of premium increases. President Obama energized a generation to vote for “Change.” Pricing them out of quality health insurance is not what they might have anticipated.

    In an attempt to “fix” this problem, Congress required insurance companies to allow younger adults to stay on their parent’s coverage until the age of 26. But, there’s a catch, here, too: this only applies if their parents are offered employer-based insurance that covers dependents. This design excludes many young people, and establishes a cliff once you reach 27. Regardless, all younger adults will face a job market in which companies are struggling with increased health care costs and are less likely to hire. For more information on this topic, see the Heritage Foundation’s report “How Health Care Reform Will Affect Young Adults”, by analysts Rea Hederman, Jr. and Paul Winfree.

    Co-authored by Gregg Girvan.

    Posted in Obamacare [slideshow_deploy]

    10 Responses to Welcome to the Real World: Grim Prospects for Young Adults under Obamacare

    1. Pingback: Must Know Headlines 6.30.2010 — ExposeTheMedia.com

    2. Stephenie, Houston T says:

      It's all based on things that anyone with a brain sees will not happen or work. We are told this , that and another pretty little stories to make us feel good but how many of these things will work ? A minimal. I see many dropping or being dropped because they cannot afford to pay the high prices. There are millions who have their insurance subsidized through their company and pay very little per month with higher deductables. These will be dropped or switched when the government madates what has to be included. We pay $50 a month for a family. On the government plan we could have to pay 10 times that.

    3. Homer N. Jethro says:

      It is amazing the "bill or goods" Obama sold the young, over optimistic, idealists in 2008. I hope they are learning the lessons that socialism in all of its forms will not work. Simple economics tells us that if it costs 20% of the GDP to pay for health care by the private sector, nationalizing healthcare and adding several additional governmental layers of bean counters will NOT decrease the cost! Thanks Cato for quietly reminding us there is no free lunch! I hope young voters are listening!

    4. Chip Bishop, Washing says:

      It is a difficult thing to draw young people's minds off the talking point of "healthcare 'til 26" long enough to demonstrate not only the negative economic consequences of this policy but also the ability for companies to simply duck the option by not covering dependents. ObamaCare advocates rely on sweet talk rather than facts, which has been working until lately, but if young people can buck their disinterest and apathy (as recent trends indicate is happening), perhaps we can "hope" for some positive "change."

      The full event at Cato, featuring Michael Cannon (Cato), Grace-Marie Turner (Galen Institute) and Kellyanne Conway (the polling co, inc.) can be seen here: http://www.catooncampus.org/videos, which includes the comments cited above along with potential responses and real reform measures.

    5. Drew Page, IL says:

      Only the Democrats would think it's a good idea to spend $125,000,000 to "sell" legislation that has already passed.

      Mr. Obama recently assembled a 'Blue Ribbon' Commission of 18 people to come up with ways to reduce government spending. I wonder what they have to say about this $125,000,000 expenditure. For all we know, that Commission may be dissolved. They recently petitioned Mr. Obama for more money because they ran out of funding to continue their work. Only Mr. Obama would need an 18 member Commission to tell him what any conservative in America would say, and what all of the European nations at the recent G20 meeting have already told him –STOP SPENDING !

    6. Robert Tremain says:

      I do not think young people will be able to understand this

      They have been brainwashed by liberal professors and indeed do believe in the free lunch

    7. KL Coleman, VA says:

      Wow, Robert Tremain. Way to generalize… It just so happens there are plenty of us "Young Adults" out there that fully understand the repercussions we will face and were smart enough NOT to vote for a Liberal president in the last election even AFTER receiving an education from liberal professors. But, thank you for your unfounded thoughts…

    8. Pingback: Anonymous

    9. johny Canread says:

      It comes as no surprise that at a conservative site, the comments would be coming from other like-minded, lock-step Stepford republicants.

      The system was failing and costing us dearly. Everyone with insurance is already paying for the uninsured. Of course during this period of adjustment, the insurance companies are going to cry and cry. But, coming from the ideology that brought this country to the edge of the financial abyss through unregulated, spend like there is no tomorrow policies. It's just jaw dropping how short your memories seem to be.

      I know you all hate to hear this. But the country is in this deep, deep mess because of the policies of the Bush administration and ideology. I remember Cheney saying "deficits don't matter" As they cranked up two needless wars , off the books. Now, that a democrat is in office, you all seem to have a fear of spending. It's OK to spend on killing civilians in foreign lands, but to spend money on highways and schools and the sick in America, somehow is beyond the pale. You should be ashamed of yourselves, you self-indulgent, greedy ideologues. Talk about brainwashing. You would continue the polices of insanity to suit your ideology in the face of historical fact to the contrary. In the case of health care ,you can only rely on predictions of doom to make your case. We don't have proof because it hasn't happened yet. With the conservative track record of always being wrong in recent history. I'm betting you are wrong again. Of course your predictions come from "experts" who get paid by the very entities their findings seem to support. Hmmm.

      And Yes, I said , needless wars. And please don't come after me with some jingoistic patriotic pablum. Recent history already proves me correct.

      I am gone now, will not return. No need to respond to me. And after reading about the moderators here. This won't be posted anyway. Cowards.

    10. Greg B. Vail, AZ says:

      While only some young adults were influenced politically by their teachers, they have been very vocal as opposed to the majority that go about the business of securing a job and look to raising a family. Liberal parents enable their kids, letting them mooch off of them as they go out into the world and preach the liberal line. That IS their job. They live off of others and encourage other to do the same. We need to instill in them that if they do not work, they get nothing. As long as government is allowed to support them they will continue. Simply cut them off of the public feeding trough they starve or go to work and support themselves.

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