May 29, 2013
Young People Won't Get What They Pay For

As we approach Obamacare's full implementation, young people in this state are going to find out in real terms what the law means for them. And for many of them, it's going to mean they'll be spending a lot more of their scarce resources on health care.

The reality of Obamacare is that its financial model is predicated on getting a lot more healthy young people into the insurance market so their premiums can be shifted to older, less healthy people. The law's effects will vary for individuals, but from a generational perspective, one of the law's main purposes is to shift money to the old from the young (but no big deal, they're doing great!).

The administration knows they need more young people in the market or the financial model will fall. President Obama told graduates in a commencement address at Morehouse College earlier this month, "We've got to make sure everybody has good health in this country. It's not just good for you, it's good for this country. So you're going to have to spread the word to your fellow young people."

Premiums for young people will skyrocket for two main reasons. 1) The law mandates coverage that many young people are not currently choosing to purchase, and skinnier plans will be illegal. 2) The "3-1 rule" limits how much insurers can charge an older person than a younger person for the same policy to three times as much. The natural ratio based on costs is somewhere between 5-1 and 6-1. Consequently, insurers will have to charge young people a lot more to achieve the 3-1 ratio. A study by the Oliver Wyman firm estimated that costs for those 21-29 will increase by 42%, while those 30-39 will see rates increase 31%.

These government-derived drivers of costs for young people will produce sticker shock and make it more likely that the administration's worst nightmare will come true: young people will make a rational choice to pay the individual mandate penalty rather than purchase inflated plans. The concern is that, without the addition of younger, healthier people, the market will enter a "death spiral" and sink under its higher costs.

Insurers, who have been doing a complicated dance of cooperation and opposition with Obamacare during its drafting and implementation, are clearly worried too. An industry group, America's Health Plans, asked in December that the administration delay the 3-1 rule, writing "Higher rates for the younger population combined with low mandate penalties during the first years of the ACA implementation will result in adverse selection because younger individuals are likely to choose not to purchase coverage."

I'll address the issue of young people and subsidies in a future post, but suffice it to say it's a warped market where some young people will receive premium subsidies and yet somehow still be the subsidizers of the system at the same time.

Posted by Adam Faber at May 29, 2013 02:42 PM | Email This
Comments
1. .
And yet somehow the pilot program for "Obamacare", Romneycare is working fine despite having the same constraint. How does the 2012 GOP presidential nominee (the candidate you voted for Adam) explain Romneycare's success overcoming this problem?

Posted by: MikeBoyScout on May 29, 2013 03:17 PM
2. MikeBS:

There are some real differences between the plans that affect the revenue of each. Even the Huffington Post says they're not "apples-to-apples".

But don't let that stop you from a wonderfully skewed, politically-driven screed!

Posted by: Shanghai Dan on May 29, 2013 04:24 PM
3. From 2,

I'm afraid all screeds on political blogs are politically driven. MBS is doing what everyone else does.

Posted by: Ten Years After - Roger Rabbit is just a liberal progressive troll. on May 29, 2013 04:37 PM
4. Mike, the mandates in Romney plan could individuals much harder, making the choice to go without insurance less attractive. But that's really a side issue at this point. The point of this post was that young people are about to pay a lot more for health care, which a lot of them will (surprise, surprise) not care for. A thoughtful person of the left might say, "Yes, young people will pay a lot more, but this is good for the overall health of the system because..." A person who wanted to make a cable TV talking point would say "But RomneyCare in Massachusetts had an individual mandate too, so..." So what?

Posted by: John on May 29, 2013 04:42 PM
5. Adam; Seems like you nailed it, because Mike BS immediately tried to change the subject. He did not wish to address that - statists want to avoid the truth. They believe if left alone (which is going against public sentiment) that Obamacare will morph into single payer with the collapse of private insurance companies (i.e exchanges)

Posted by: KDS on May 29, 2013 04:58 PM
6. @2 thanks Dan.

From the referenced article

Romneycare includes penalties for individuals not having health insurance that are based on half the cost of the lowest-priced Commonwealth Choice plan, and are calculated by age and income. The tax penalty for 2012 can start at $19 per month or $228 per year for an individual with income at 150-200 percent the Federal Poverty Guideline (FPG). Then the penalty ranges to $105 per month or $1,260 per year for an individual with income above 300 percent FPG.

So, the 2012 GOP presidential nominee's solution to the problem anticipated by Adam is a modification of Obamacare to increase the disincentives to not enrolling based upon ability to pay and age.

Seems like a reasonable risk mitigation.
Maybe after the Republican led House votes to repeal Obamacare for the ineffectually thousandth time (and what ever happened to the "replace" piece of that promise???) they can take this up.

Posted by: MikeBoyScout on May 29, 2013 05:15 PM
7. MBS: Why should they attempt to replace Obamacare ? Obama and/or the Senate would simply veto or vote it down, for the Democrats are the party of destruction and Obamacare is a weapon of destruction.

I give the GOP credit for recognizing that fact. BTW, once Obamacare kicks in 2014, it will be more difficult to replace it, but not impossible - especially if it collapses. Those odds are looking fair at this time.

Once again, you are blowing smoke...

Posted by: KDS on May 29, 2013 06:33 PM
8. MikeBS,

All I did was point out your errors.

I would be curious to read how you think Obamacare will impact young people, given their premiums will at least double. And if they do not participate (the more logical conclusion, given the penalty is a LOT lower than the cost of insurance, and you can sign up for insurance immediately if needed), how will Obamacare cover its costs?

Remember, President Obama (and you, IIRC) claimed it wouldn't add a single penny to the national debt.

Posted by: Shanghai Dan on May 29, 2013 07:14 PM
9. Again....what is health insurance? MBS....do you know what insurance is? Why do we need government telling us we need health care? I need insurance and if I want to have other things covered, I should have the CHOICE to do so, but not be forced to do so.

You believe is choice correct? Freedom? Taking personal responsibility? These are pillars of your life...right?

Posted by: Dengle on May 29, 2013 10:54 PM
10. and you can sign up for insurance immediately if needed

Like just about everything else you post here, you don't know what you are talking about. Individuals purchasing insurance on the exchanges will be limited to an 8-week annual open enrollment period, or they will have to purchase insurance within a limited time after events such as losing insurance from an employer.

Posted by: scottd on May 30, 2013 06:29 AM
11. Scottd,

Or if your economic situation changes, like losing (or quitting) your job. Then you can get a waiver to immediately sign up.

Lots of holes in it... Of course, that's probably why the IRS is illegally implementing rules outside of PPACA, to try to patch this beast, so that the IRS will have not just control over the output of your life (income) but whether you actually get to live or die.

Posted by: Shanghai Dan on May 30, 2013 07:59 AM
12. Dan: Your claim was unconditional, that you can sign up for health insurance immediately if needed. That wasn't true.

Now you are claiming that you can sign up if you quit your job. That's only true if you already have qualified health insurance on your current job. It doesn't make sense that you would give up your job and health insurance you already have just for the privilege of buying your own insurance and being unemployed. So, once again, you don't know what you are talking about.

I expect you'll be changing the subject soon.

Posted by: scottd on May 30, 2013 08:25 AM
13. You are stuck in the minutia, scottd - no reason there shouldn't be similar policies for open enrollment like there were before.

Now, compare the costs from say 2006 vs. 2014 and give us a full-fledged report if you dare.
That is the crux of why Americans prefer the repeal and replacement of Obamacare. Now, lets see how quick you attempt to change that subject.

Posted by: KDS on May 30, 2013 09:07 AM
14. scottd,

Did you read the bill to find out what's in it?

Posted by: Shanghai Dan on May 30, 2013 09:14 AM
15. Dan: Is there anything I've said that's incorrect? Let me know.

Posted by: scottd on May 30, 2013 09:52 AM
16. scottd,

Yes. Hardship exemption. It breaks your whole "can only join at certain times". If you get a hardship exemption, you can join an insurance plan at any time. You give up your hardship exemption, but you are able to join outside the small window.

So yes. You're incorrect.

Posted by: Shanghai Dan on May 30, 2013 11:17 AM
17. Furthermore, scottd stays away from why a majority of the public (56-34 percent in one poll) would prefer that Obamacare be repealed in favor of a different healthcare system.

Come on in - the water's fine.

Posted by: KDS on May 30, 2013 11:21 AM
18. A good read to show why care for the insane and mentally disabled has gotten a lot worse over the past 50 years. The crux is that it is the same great society style statism as we see with Obamacare.

Obamacare too will fail. The IRS and HHS are in charge. LOL. The IRS will probably only penalize conservatives. And with only half the revenue on top of youth opting for the penalty, that too will cause the death spiral.

Posted by: Leftover on May 30, 2013 12:29 PM
19. Dan: You said you could join an insurance plan immediately. The hardship exemption doesn't make that possible -- it just allows you to avoid paying a penalty for being uninsured if you can demonstrate poverty. So you were wrong about that.

But maybe I have it wrong. Instead of arguing generalities, why don't you show us how your scheme would work with a specific example? Let's say you've avoided insurance. In the middle of March 2015, you start to worry about that swelling in your neck that will later turn out to be cancer. Walk us through the steps of how you would then join an insurance plan "immediately" and obtain timely treatment.

Posted by: scottd on May 30, 2013 12:52 PM
20. Tomorrow the RINOS come to town.

Yes, it's this years so called Cascade Conference hosted by noted Republicans as Governor Rob McKenna and Attorney General Reagan Dunn.

Yes, it's funner than the circus, as this year the RINOS are going to explain how the only way the party will win in this state is if they cater to a bunch of pot smoking Eco terrorist homosexuals. After all you must have a big tent, ie everyone but those narrow minded clods on Sound Politics.

If you missed the fun of prior years you can watch pass years event including last years how 2012 will be the year we get the governor's office back, 2011's how to stop a repeat of 2010 from happening again, and much much more.

Check it out on this link below. Surely after this weekend it will include 2013s event as well.

http://www.tvw.org/index.php?option=com_tvwsearch&keywords=Mainstream

Yes, the Mainstream Republicans, making the Democrats unnecessary and even redundant!

Posted by: Kay on May 30, 2013 01:15 PM
21. Leftist Republicans meet TOMORROW!

http://www.tvw.org/index.php?option=com_tvwsearch&keywords=Mainstream

Prime Speakers Governor McKenna and Attorney General Dunn.

Posted by: Kay on May 30, 2013 01:34 PM
22. Hello.

Just wanted to remind you that Kerby Wilbur is going to speak in front of a yearly confab of Left Wing Republicans two days from now.

He is going to speak on who needs to be driven out of the Republican Party in order for it to win in Washington State.

Most likely TV-W will cover this speech as they have covered similar functions in years past.

I hope you will be able to do your own review on what he has to say.

http://www.tvw.org/index.php?option=com_tvwsearch&keywords=Mainstream

Posted by: Ted on May 30, 2013 01:44 PM
23. scottd,

I do not see anything in ACA that prevents one in your scenario from quitting their job, moving in with a fried, having almost zero income, claiming hardship, and then signing up for minimum coverage to get treated for cancer. If you have cancer, then quitting your job is no big deal by comparison. If you have no job or income, you can claim hardship. So what if that delays treatment by a bit. Better than no treatment. And still unfairly burdening those who play by the rules. Especially if you consider the cost of certain cancer treatments, all the testing, etc. There are also exemptions for certain religious sects, and health care sharing ministries. I am guessing the latter will be as easy to qualify for as a pot card, I mean a medical marijuana card.

The system is setup for abuse. Especially for the immoral on the left who believe that they have a right to healthcare, food stamps, unemployment, cell phones, an so on.

From the IRS website:

24. What happens if I do not have minimum essential coverage, and I cannot afford to make the payment with my tax return?

The IRS routinely works with taxpayers who owe amounts they cannot afford to pay. The law prohibits the IRS from using liens or levies to collect any payment you owe related to the individual responsibility provision, if you, your spouse or a dependent included on your tax return does not have minimum essential coverage.

Posted by: Leftover on May 30, 2013 01:47 PM
24. Leftover: Final regulations for exchanges were published months ago and there are plenty of websites out there explaining how to enroll and when you can enroll.

You can't enroll anytime you like -- despite what Dan says. You also don't get to enroll just because you quit your job -- another pile of BS from Dan.

You can get an exemption from paying the penalty for not having insurance, but that doesn't allow you to enroll anytime you want.

Believe what you want.

Posted by: scottd on May 30, 2013 02:22 PM
25. We can only hope and pray that Obamacare will collapse and fail over the next few years instead of drag on and turn the infrastructure into the UK. Eventually, it will most likely fail in its present state - better sooner than later. There's an outside chance it could be salvaged, but not without a large amount of work, which would entail repeal of some sort.

Single payer will probably not be easy to achieve with the convoluted, Gordian knot nature of this abysmal legislation. It was concocted by the party of destruction; the Democrat party (the name of said party lost their designation of Democratic party in the last millennium and once and for all when this bill was signed).

Posted by: KDS on May 30, 2013 06:04 PM
26. The young people have already got exactly what they paid for. They overwhelmingly voted for the crooks, liars and know-nothings that we have occupying the White House so any screwing they get through ObamaCare™ is of their own making. And any lefty smart ass who thinks that ObamaCare™ is anything like what Romney did in Massacucits (I see you MBS) is delusional. When you have a corrupt, politically influenced agency like the IRS enforcing this thing, there is no end to the bullsh*t that the citizenry will be exposed. Don't see that in RomneyCare™. The latest on ObamaCare™ is that they will be enacting zoning restrictions on fast food restaurants. Yeah, that's right. And there is more just like that hidden in that monstrosity. No wonder every Democrat up for re-election is running from that turd like the plague. Add to that the natural overweening of all "Progressives" (they all know better than you how to run your life and now they have the government to do it) and it's pretty hard to compare anything to ObamaCare™ but Godzilla, crushing healthcare here like he did Tokyo.

Posted by: Oscarphone on May 30, 2013 07:24 PM
27. Too bad many Republicans are ineffective at messaging. This would be a great opportunity for big gains by the GOP - but they don't really present a remedy that people will swallow and in reality, a majority of candidates fall short. Will the party of stupid rise to the occasion and be able to make notable gains over the party of destruction in the 2014 midterms ? Time will tell. Maybe 20 years ago, it was not so crucial to be concerned over a political party - back when polarization was small compared to today.

You are correct about the milennials though. They have been politically dumbed down thanks the education system in many instances and have screwed their own future. The ultimate proof is if the Immigration bill passes in both Houses resembling anything close to what the gang of 8 has in current form, you can kiss the GOP and any hopes of a good future in this country goodbye !

But the leftists/progressivists who are ignorant of the future believe its cool and hip not to care about immigration just like health care. That is why these folks are diplomatically referred to as low information voters.

Posted by: KDS on May 30, 2013 10:16 PM
28. @18: A good read to show why care for the insane and mentally disabled has gotten a lot worse over the past 50 years. The crux is that it is the same great society style statism as we see with Obamacare.

Do you even bother to read the things that you post?

The argument in this article is that less government power to manage the mentally ill and more of a focus on closing government institutions for dealing with patients has resulted in these problems. Would you argue that granting more power to the government to involuntarily commit you to an asylum would be a good thing? Do you enjoy your civil liberties?

@21: The system is setup for abuse. Especially for the immoral on the left who believe that they have a right to healthcare, food stamps, unemployment, cell phones, an so on.

As opposed to the immoral on the right, who believe that the poor and uninsured should die on the streets simply because they're poor.

@24: The latest on ObamaCare™ is that they will be enacting zoning restrictions on fast food restaurants. Yeah, that's right.

As pudge famously says: you're lying. I'd welcome you showing proof of that.

And this, of course, is the biggest issue with the unhinged right debating the ACA. While there are definitely some issues with it, ones that are likely shared by both the left and the right -- giveaways to the healthcare industry and Big Pharma being the main ones -- most conservatives manage to muck it up by going into the weeds with baseless and unfounded claims about death panels and fast food zoning. It also doesn't help that they are opposing features of the law that were specifically championed by conservatives less than a decade before, such as the individual mandate, or that conservative counter-proposals seemed almost fixated on shallow solutions to much deeper issues, such as malpractice tort "reform".

Posted by: demokid on May 31, 2013 06:31 AM
29. DK @ 26, Re 24:

http://www.forbes.com/sites/realspin/2013/05/30/obamacares-slush-fund-fuels-a-broader-lobbying-controversy/

I'm not going to tell you which paragraph so you have to READ the whole thing. Oh, and I just LOVE the "liar" thing. FU.

Posted by: Oscarphone on May 31, 2013 07:20 AM
30. "As opposed to the immoral on the right, who believe that the poor and uninsured should die on the streets simply because they're poor."

@26 - Just another pompous ass stenchified comment by a leftist low information voter. Actually, that is baseless and you used the divisive democrat talking points - who are manipulative, hypocrites and your credibility and judgment are nil. Putz...

Posted by: KDS on May 31, 2013 09:23 AM
31. DK @26 - your attitude is to hell with integrity, the Democrats should give the poor all Obamaphones and so the Republicans will never get their vote.

Yeah, that's the way to run a country...into the ground and into a banana republic.

Posted by: KDS on May 31, 2013 09:29 AM
32. When your employer dumps your medical because the penalty is cheaper than the premium, you will be on your own,to pony up the premium or have an IRS tax lien on your home. With penalties and compounded upon compounded interest.

Now you know why the IRS is arming its agents.
And why The Regime wants your firearms.

Tyranny is on the horizon, my friends, and we will bow to the tyrants. witnessing the destruction of the republic.

Some, relatively few, will stand in defiance, and be quickly murdered. Then, The Regime will start on Christians.

Posted by: Independent Voter on June 1, 2013 08:19 AM
33. Good job on scrubbing the rif-raf spam out of here, except for #31.

This administration is one giant smoke screen and is Nixonian on steroids. Thanks for this pile of excrement, low information voters and ignorant pinheaded leftists and also you on the right who didn't bother to vote (over 5 million of you) in 2012.

Get ready for a rough ride until 2016 - the radical Obama tyranny will try to take hold with an internal struggle, but it will go up in flames...

Posted by: KDS on June 1, 2013 09:57 AM
34. When your employer dumps your medical because the penalty is cheaper than the premium, you will be on your own,to pony up the premium or have an IRS tax lien on your home.

Quite possibly the stupidest argument right-wingers make on this subject.

Obamacare doesn't incentivize employers to drop health insurance; it disincentivizes them. That's because current law doesn't require employers to offer insurance, so employers could have saved a ton by dropping coverage. Under Obamacare, they now pay a penalty for doing this, so their savings are less, therefore, less incentive.

I don't expect you to understand this. After all, you expect Obamacare to lead directly to a govt pogrom on Christians. Now that's putting the nut in "wingnut"! I'm sure commenters like you make Adam proud to post here.

Posted by: scottd on June 1, 2013 12:19 PM
35. Re #32:

Hey SD, you stupid b*st*rd. How about this from the HUFFINGTON POST: "Small Businesses Opt To Pay Obamacare Penalty Instead Of Offering Health Insurance"

You know, I think this is why a crook like Obama gets to run the country for 8 years. People like you. You have no clue. As long as it's got a "D" around it somewhere it's just fine. Why don't you look up some facts? Challenge your point of view for a change? The thing about businesses dropping coverage and paying the penalty has been common knowledge since AKA was put into written word and you're walking around saying the opposite years later? God man, GET A FREAKIN' CLUE.

Posted by: Oscarphone on June 1, 2013 01:59 PM
36. "When your employer dumps your medical because the penalty is cheaper than the premium, you will be on your own,to pony up the premium or have an IRS tax lien on your home."

Quite possibly the stupidest argument right-wingers make on this subject."

@32 - True Story. Why is it ? Specifics please - cite chapter and verse of the ACA if you are going to make your pompous blanket allegations.

Leftists may be politically smarter than the right, but when it comes to economics, they are downright stupid and the right runs rings around them.

Actually, the correct response depends on the age and situation of the applicant. That bill was not smartly crafted and if you think it is, that speaks volumes for your IQ.

Posted by: KDS on June 1, 2013 03:26 PM
37. My apologies to @33 - The true story comment was intended for you. You pretty much nailed it.

Posted by: KDS on June 1, 2013 03:28 PM
38. Hey Oscar: You dimwit -- the companies mentioned in the article you cited are already not providing health insurance for their workers. They've simply decided to pay the ACA penalty and keep doing that. They haven't dumped medical coverage.

However, under Obamacare, those workers will now be able to purchase comprehensive insurance on the exchanges, subsidized by the penalty payments of their skinflint employers. Ain't it grand?

Posted by: scottd on June 1, 2013 05:07 PM
39. I can always tell when I'm winning a debate with a progressive.That's when the insults and name calling come out. Every time.

Somethings I can just count on.

Posted by: Independent Voter on June 1, 2013 07:34 PM
40. I haven't seen what my health care premiums, deductibles and co-pays will be for 2014, or even if I will have ANY coverage.

Tell me again how wonderful this point of a gun health care system is.

Please.

I know you can.

Or maybe you will just blame Bush.

Posted by: Independent Voter on June 1, 2013 07:37 PM
41. Hey @36 - You dodged the question in @34 - no surprise. Still waiting for your explanation. Surprise us with something credible and substantive.

Your logic so far has proven to be dimwitted.
Your plausible response "Duh, what was the
question ?"

Posted by: KDS on June 1, 2013 08:43 PM
42. Independent Voter: Watch what you say. The IRS is monitoring this thread and soon they will be coming to murder you for your defiance.

Posted by: scottd on June 1, 2013 09:14 PM
43. scottd's dodges are small potatoes.

Impeach Holder ! (The House Republicans would be able to do this - maybe its a later resort...)

Posted by: KDS on June 1, 2013 09:34 PM