Yes: Some youths won't want to pay for the affordable care act

ALEXANDRIA, Va. — Virtually all Americans will be required to have health insurance under the Affordable Care Act starting in 2014, and President Barack Obama especially wants young, healthy people to sign up.

About two-thirds of the uninsured are under age 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 undermine its success. It will all come down to costs.

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

The law requires young people to pay more for their health coverage so older people can pay less. A study published this year by the American Academy of Actuaries' Contingencies magazine found that because of this provision, "premiums for younger, healthier individuals could increase by more than 40 percent." Young men will pay even more than young women.

A former director of the Congressional Budget Office, Douglas Holtz-Eakin, conducted a survey that showed fewer than half of young people will sign up for insurance if premiums rise by 30 percent.

Young people also face a daunting approval process in applying for coverage. Applicants must divulge their income, family status and information about their employers, details on any insurance offered at work and health habits — just to find out if they are eligible for subsidies.

Ezekiel Emanuel, a key architect of the president's health plan, says he is worried that young people will be "bewildered," and they may "forgo purchasing health insurance and opt to pay a penalty instead."

That certainly will be an attractive option for many since the penalty starts at just $95 the first year.

And there is yet another disincentive for young people to enroll in coverage: they can wait to sign up for coverage until after they get sick or injured. The law requires health insurance companies to sell insurance to anyone who applies.

But 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 medical costs, thereby driving even more young people out of the market.

The White House believes that it will be able to persuade young people, who overwhelmingly supported the president, to enroll out of loyalty.

"The president connects with young people, too, so he needs to use that bond and get out there to convince them to sign up for health insurance to help this central part of his legacy," according to Emanuel, a health-care expert at the University of Pennsylvania.

But when it comes down to paying thousands of dollars for health insurance that they may not want or need, that zeal may be severely tested.

Consider, for example, a 27-year-old person earning about $34,000 a year. He currently could buy health insurance for about $200 a month. However, the new rules and more generous benefits required under the health law mean he would have to pay about $300 a month instead. He could get a subsidy of about $20 a month but, even with that, he still would be paying nearly $1,000 a year more for health insurance than without the law.

The White House is expected to mount a massive advertising campaign this summer to encourage people to enroll.

This will severely test his young supporters, who are having the hardest time finding jobs in our economy. Forcing them to also purchase health insurance — and pay more for it — may cool their enthusiasm to help the president fulfill his legacy.

Grace-Marie Turner is president and founder of the Galen Institute.

No: Obama's young supporters will enroll, but ACA is far from perfect

WASHINGTON — What's generally termed Obamacare wasn't the brainstorm of President Barack Obama, but an Alice in Wonderland "witches brew" concocted in 2010 by Senate Majority Harry Reid and then House Speaker Nancy Pelosi with generous advice from Big Pharma, Big Insurance and the AARP.

All three groups stood to make billions off a convoluted bill that added 19 million potential new customers to the nation's health care system, but hardly anyone in the Democratic majorities that rammed the bill through Congress had any idea what the legislation actually contained.

As Pelosi famously said on March 9, 2010, "We have to pass the bill so that you can find out what is in it."

Now Democrats are finding out key sections of the law may contain the seeds of its own destruction.

One of the most glaring examples is the requirement that uninsured Americans under 40 — who currently constitute some two-thirds of the nation's uninsured — must enroll in the new program paying annual amounts averaging $3,000 depending on income for a full range of services that most don't want and very few need.

The Affordable Care Act contains age-rating rules that allow the government to impose premium cost on younger participants of about 3 to 1, to help pay for the oldest group who consume about five times as much medical care as the under 40 group.

Why would mostly healthy younger Americans pay thousands of dollars more for health insurance loaded with coverage they don't need when they can opt out of the system by paying a $95 fine and then — if needed — purchase catastrophic insurance for one-tenth the price of ACA coverage?

The question more than answers itself, but the overall key to the puzzle may be Obama's popularity with the under 40 age group. Enough of them may decide to sign on and pay full-freight because they believe in other aspects of Obama's second-term agenda — such things as withdrawal of U.S. troops from Afghanistan and better treatment of gays and minorities.

If Obama can't persuade enough younger Americans to sign up, the so-called signature legislation of his first term may collapse.

If that happens, progressive Democrats should step forward and make their case for single-payer system to the American people. They have a strong case to make — supported by thriving single-payer systems the world over including countries like Canada and Germany.

Much of the waste in our current health care system comes from higher administrative costs and the exorbitantly higher prices Americans pay for prescription drugs.

The Affordable Care Act has some provisions aimed at reducing costs, but the overall task borders on Herculean in a system where hundreds of private insurers will still find it profitable to avoid paying for the sick and injured, and concentrate on finding healthier groups of people to insure.

Numerous other studies show huge savings would come from allowing the federal government to purchase prescription drugs in bulk from pharmaceutical companies yet Congress — swayed by campaign contributions — has always balked at this common sense approach.

It would be foolhardy to rule out the possibility that large numbers of Obama's younger supporters will step forward and enroll in the ACA.

If they don't, however, other enticing alternatives are available — ones like Vermont's pending single insurer system that covers everyone — similar to the federal Medicare program for Americans over 65.

According to a recent article in the New England Journal of Medicine, Vermont's program will save a whopping $122 million in administrative costs by 2017. That is a huge saving for a very small state and savings obviously would be much greater for larger states.

Wayne Madsen is a contributing writer to www.onlinejournal.com.