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  • Obamacare's 2nd Anniversary: No Gift for Young Americans

    This week, Obamacare will have its second birthday, but there’s little reason to celebrate. Throughout the week, Obamacare advocates will be emphasizing the law’s supposed benefits for specific groups, but, as Heritage’s research over the past two years has shown, Obamacare harms Americans—even the groups showcased by the left.

    Today, the focus is on the impact of Obamacare on young Americans. Advocates will tout the provision that allows young adults to stay on their parents’ health plans until age 26. But Heritage research shows that despite this provision, the overall effect of the law will be that younger Americans will face higher premiums and incentives to remain uninsured, meanwhile serving as the generation that will ultimately foot the bill for the law’s new deficit spending.

    Higher Premiums. Young adults will pay higher premiums under Obamacare because of its age rating system. The law stipulates that the maximum variation allowed in adult premiums is a cost ratio of 3 to 1. But as Heritage research shows, “The natural variation by age in medical costs is about 5 to 1—meaning that the oldest group of (non-Medicare) adults normally consumes about five times as much medical care as the youngest group.” Obamacare’s “rate compression” causes insurers to charge artificially low premiums for older adults and higher premiums for younger adults. Moreover, “Actuaries estimate that the effect will be to increase premiums for those ages 18–24 by 45 percent and those ages 25–29 by 35 percent while decreasing premiums for those ages 55–59 by 12 percent and those ages 60–64 by 13 percent.”

    Another study performed in Wisconsin by MIT economist Jonathan Gruber further supports this. The study finds under the health law,

    [T]here will…be significant premium increases in the Individual Market with an estimated 59% of the market experiencing average premium increases of 30%, even after accounting for tax subsidies. This is primarily due to healthier members subsidizing a greater portion of the less healthy members’ premium and the younger demographics subsidizing a greater portion of the older demographic’s premium.

    Incentives to Remain Uninsured. As Heritage explains, contrary to Obamacare’s goal of universal coverage, “certain provisions of the new laws will make obtaining health insurance less desirable by increasing costs, causing even more Americans to drop or lose coverage.” High premiums will discourage young and healthy individuals from purchasing coverage, and the penalty associated with the individual mandate will not be effective at coercing people to purchase insurance, since it will be less expensive than insurance. As the young forgo coverage, adverse selection—that is, the increase of older and sick people in the insurance pool—will cause premiums to increase even more, further discouraging the enrollment of younger, healthier people. Obamacare’s several other premium-increasing provisions will only make matters worse, encouraging young adults to wait until they need coverage to buy insurance.

    The Burden of Paying for Obamacare. Younger generations will be left accountable for Obamacare’s irresponsible spending. As James Capretta writes for Heritage:

    The President and congressional leaders have argued that a primary benefit from the health law will be reduced long-term budget pressure and thus a brighter future for coming generations of taxpayers. But when the cost estimate is adjusted for omissions, gimmicks, double-counting, and unrealistic assumptions, it is clear that the new health law will increase the burden, not lessen it.

    The most recent estimated cost of Obamacare’s coverage provisions is $1.5 trillion over 10 years—which still fails to represent a full decade of new spending under the law, since the most costly provisions don’t kick in until 2014. To learn about reform that would truly eliminate the burden of crushing debt on future generations of taxpayers, read Heritage’s Saving the American Dream proposal.

    Posted in Featured, Obamacare [slideshow_deploy]

    11 Responses to Obamacare's 2nd Anniversary: No Gift for Young Americans

    1. Bobbie says:

      Obama's nationalized health care isn't a gift for anyone self governing. Federal governing is all based on cost and contingency! How good can the health care be? Please, there's too many tricks that makes this nationalized health care inhumane and the American peoples constitution makes the American people exempt. Please stop this crossing of the line, now!

      • John Nail says:

        Since this is not nationalized healthcare and the govt. is not controlling all costs your post is not relevant

    2. @ReformedRep says:

      Alyene, I disagree with your article particularly lines like this:

      "But Heritage research shows that despite this provision, the overall effect of the law will be that younger Americans will face higher premiums and incentives to remain uninsured, meanwhile serving as the generation that will ultimately foot the bill for the law’s new deficit spending."

      There is no deficit spending with this law. It is funded and reduces the deficit over time, per the CBO, unlike the $7 trillion the Bush era unfunded Medicare Part D adds to the deficit.

      The exchanges can offer special plans to those <30. "Young Invincible" plans. http://www.whitehouse.gov/files/documents/health_

      The access to premium subsidies, free preventive care, the end of pre ex restrictions, extensive women's preventive care and contraceptives coverage all look like very good deals for young folks getting started in life.

      Keep them well and help,them get financially secure and for the rest of their lives they will never have to worry about being declined for coverage or if they get seriously ill going bankrupt to pay their bills.

      Most importantly these new, creative citizens will have the freedom to venture out on their own to start a business and be able to have coverage freeing up their entrepreneurial spirit.

      Isn't Heritage and the right all in favor of supporting job creators and innovation? The ACA will help do just that, esp for this younger generation.

      • Bobbie says:

        if funding is coming from the deficit, there's deficit spending! Preventive care is speculation only! all things you mention are personal responsibilities that you want everyone else to cover the biggest responsibility to them all and that's the personal expense which helps make responsible choices.

        Keep young folks well? By providing contraceptions that all of a sudden is a taxpayers obligation? And help them get financially secure? How is everyone so mentally challenged in the 21st century that they can't help themselves like everyone before them? Public school indoctrination! Teach not what you can do for yourself, but what the government will do for you while they label you "victim" as you take it. What an important fool you are to the government!

    3. george says:

      In this article the author mentions the natural variation between young and old in setting health insurance premiums is approximately 5 to 1, vs the Obama dictate setting this at 3 to 1. However, what is more important is what the actuaries working for health insurance actually charge/rate and that is approximately 10 to 1 currently which of course further exerbates the issue of cost transfer toward those under 30. Plus, don't forget, insurers cannot distinguish between male and female (currently females are rated much higher due to pregnancy) which means that young males will see their rates skyrocket!!

      • John Nail says:

        Remember those under 30 will have access to special "young invincible" plans if buying on their own. If part of a group at their employer this point is not relevant as the average cost will be the same as it is now in the group rating.

      • John Nail says:

        The exchanges will offer special low cost plans for those under 30 BTW.

        And if young males see their premiums rise of course the 51% of young adults who are women will see them decline.

        Also all young adults making <$43,000 can qualify for premium subsidies as well.

        If you are really interested in all that can benefit this group here is a good link: http://www.whitehouse.gov/files/documents/health_

    4. Darren says:

      Bottom line is, government is more inefficient than the private sector. Just look at the current debt and Social Security. And do you really want Daddy Government taking care and controlling you from cradle to grave? I prefer FREEDOM!!!!!!

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