November 22 2013
“Will the young people sign up?” That’s one of the White House’s many worries when it comes to Obamacare’s failure to launch. In reality, the life circumstances of young adults are so diverse, a one-size-fits-all policy doesn’t fit most of us well.
Sadly, the government’s dumbed-down view of young adults as a homogenous consumer bloc has resulted in some pretty poor advertising aimed at “bros,” and recently "hoes" on top of bad policy. This insults the intelligence of young Americans who are expected to pick up the tab for Obamacare’s endless and unfair costs.
It’s no surprise that Obamacare ads aimed at youth are oversimplified, belittling and stupid. After all, the law itself includes a provision requiring insurers to cover “adult children” up to age 26. When the government thinks of you as an “adult child,” be prepared for patronizing.
Reality is more complex. First of all, adult dependent coverage doesn’t apply to everyone under 26. If your parents are uninsured, you’re out of luck. If you’re below the threshold, you might be automatically enrolled in the troubled Medicaid program. On the other hand, if you have a job or are married, you might be covered through your employer, your spouse, or your spouse’s employer.
Employer-sponsored insurance is becoming harder and harder to get. For one thing, you have to get a job first. The most recent data (July 2013) puts youth unemployment at 16.3 percent. And young adults are more likely to work in entry-level or part-time wage jobs that might not come with benefits.
But the focus of the frat fight is really those young adults who buy their own insurance. This week’s disappointing news that only 106,000 Americans successfully selected health plans in the individual exchanges has President Obama (and the insurance industry) worried. Beyond the size of this pool, the shape is very important. If these enrollees are disproportionately old or sick, then a spiral of adverse selection may lead to higher and higher premiums in the years ahead.
Furthermore, President Obama knows that allowing Americans – young or old – to keep pre-Obamacare plans would worsen this “death spiral” problem. That’s why his “fix,” announced on Thursday, is designed to effect no practical change.
Obamacare mandates a minimum level of coverage that includes maternity care, mental and behavioral health, alcohol rehabilitation, and prescription drugs – among other benefits – and these new mandates come with a cost. Obamacare also forbids annual or lifetime limits on plans, which resulted in a mass exit of “mini-med” plans and student plans once offered by many colleges.
The American Action Forum produced a study that shows the average 30-year-old man and the average 30-year-old woman in the individual market will see an increase of 260 and 193 percent, respectively, in premiums for the lowest cost plans. The American Academy of Actuaries has calculated that, even taking subsidies into account, 4 out of 5 people under 30 will pay more under Obamacare.
These increases are not simply a result of mandated health benefits, but another price-setting provision – called “age band compression” – requires insurers to keep premiums at a 1:3 ratio from the youngest buyers to the oldest. (This means if your grandmother’s insurance is $600/month, your insurer can’t charge you less than $200/month.)
The decision to buy – or not to buy – insurance should not be a political (or criminal) decision. Young adults are smart enough to evaluate insurance products in a market and select the right coverage for us. But sadly Obamacare’s advertisers – as well as its authors – don’t think of us as anything more than unthinking “bros.”