The Obama administration hasn’t provided yet the initial enrollment numbers for Obamacare.
Word is, though, that not only are the number of enrolled going to be much lower than projected overall, but the lack of enthusiasm is going to be particularly acute among young adults.
That’s no surprise.
The buggy HealthCare.gov website would naturally turn off the most Internet-adept in the potential enrollment pool. But even after the website’s glitches are fixed, I would not expect a great rush from the younger uninsured demographic to sign up.
Even though the president likes to tell younger audiences that their coverage will only be about as much as a month’s cellphone or cable bill, the math is not in their favor.
The penalty for ignoring the insurance mandate — $100 for the first year — is less than a month’s premium. And since Obamacare prohibits exclusions for pre-existing conditions, there really is no disincentive for young adults from taking their chances. If they follow the medical norm for their age group, they will rarely need a doctor’s care. But even if they bet wrong and develop a serious health condition, they can purchase insurance at that time. Their premiums and benefits will be no different than if they had been enrolled all along.
There is, however, a more principled reason why young Americans might be balking. They are, as is often the case with government programs or tax policies, getting the short end of the stick. Obamacare is designed to be yet another government-driven redistribution of wealth from the young to the old. It keeps health insurance premiums artificially low for those approaching retirement age by inflating the rates for those just getting established in their careers and starting families.
Carl Schramm, a former health insurance executive who now teaches at Syracuse University, explained the generational inequity in an op-ed column published in The Wall Street Journal last week.
He cites a calculation by the Manhattan Institute, a conservative think tank, that a healthy 27-year-old male will pay double the premiums under Obamacare than he would have paid under previous market rates.
“One reason,” writes Schramm, “is that the law now limits insurers to charging the sickest seniors no more than three times the amount they charge their youngest customers. Given that 64-year-olds use on average six times as much health care as 19-year-olds, the Affordable Care Act forces young people to pay considerably more than the cost of their own care.”
Defenders of the generational disparities argue that Obamacare merely treats health insurance policies purchased by individuals similarly to the way that group policies have long been handled in the corporate world. The risks are spread over the pool of insured, so that premiums are based more on the overall claims history of the group rather than individual experience.
The difference, though, is that with employer-provided coverage, the company picks up most of the tab. So it doesn’t really matter if the employer pays a little more than it should for its younger workers and a little less than it should for its older ones. The cost winds up netting about the same to the company.
With individual policies, though, a younger and healthier insured is taking money out of his pocket to help subsidize the insurance for his older and sicker counterpart. The payback supposedly will come in three decades or so, when these “young healthies” — as Schramm calls them — will be older and sicker and have their coverage subsidized by the next generation.
The problem with that promise is that these government-operated Ponzi schemes — in which benefits for one generation of recipients are being paid by the next — eventually collapse under their own weight. It takes an increasingly greater contribution from those entering the pipeline to keep the benefits from eroding for those who have been in it for a while.
Medicare and Social Security, for example, are fast approaching insolvency because elderly recipients are receiving much more in health-care and retirement benefits than they ever paid for. At some point, younger workers will make up the difference through increased contributions, either in the form of higher tax rates or later retirement ages.
It’s not just the federal government either that robs from the young to give to the old. So do state governments. In Mississippi, homeowners 65 years of age and older, most of whom have already paid for their homes, get a greater exemption on property taxes. That break is paid for by younger homeowners, who are often still laboring under a mortgage.
President Obama owes his two elections in large measure to the heavy support he attracted from younger voters. They have been rewarded, though, with a health-care plan that actually favors the generation that leaned toward his GOP opponents.
