Friday, September 24, 2010

Young Adults Are Key to Health Care Reform; But There Are Strong Incentives to Remain Uninsured

FOX NEWS -- (Note: This is from January 2010, before Obamacare passed.) For the first time ever, the federal government is going to require that everybody obtain health insurance coverage. For those who have insurance through their employers, the so-called individual mandate may have very little impact. But for young adults, many of whom are not currently covered, the health care bill will add a new and costly expense to their budgets.

MP: For the age group below 35 years, there were more than 28 million uninsured Americans in 2009 and that represented 56% of the 50.6 million uninsured (data here), see chart above. For the 18-34 year age group, there were almost 21 million uninsured, which is 41% of the total number of uninsured.

The federal government wants to require young, healthy people to buy insurance because if they don't, premiums for everyone else will go up. Insurance companies need low-maintenance, young customers on their rolls so they can raise money to cover benefits for less-healthy people the health care bill will require them to insure.

"If you don't have a mandate that gets in the young people who are cheaper, you're going to see average premiums rise," said Jim Kessler, vice president for policy with Third Way. "There's no way around that." But both houses passed two other reforms that create an incentive not to buy insurance.

1. The bills allow patients to basically purchase insurance whenever they want.

"You can literally buy an insurance policy in the ambulance on the way to the hospital," said Douglas Holtz-Eakin, former director of the Congressional Budget Office. "You could imagine a situation in which you would pay the fines, stay out of the insurance pool, and at the moment when you need it, you go out and buy it."

2. The other disincentive is that both houses change how much older customers can be charged relative to younger customers. Analysts agree this will drive up the cost for young people, though it's not clear by how much.

"If you charge people a fair price, then a 50-to-60-year-old should pay about six times as much as a 20-year-old," said John Goodman, president of the National Center for Policy Analysis. But he noted that the Senate bill says older people can be charged only three times as much; the House bill says they can be charged two times as much. "So we're going to penalize low-income young people in order to lower the premiums for older wealthier people."

"Young people are going to bear a disproportionate cost in this reform," Holtz-Eakin said. The Senate tries to make it easier on the young by offering them a bare-bones insurance plan that would be less expensive than all the others. This is perhaps the keystone for the entire reform effort, because if young healthy people don't get into the insurance pool, everything else -- especially cost containment -- could fall apart.

MP: In other words, it seems like any real cost containment in the health care overhaul is pure fantasy, and will never happen under any conditions. Either you force 20 million young people to purchase insurance they aren't willing to buy now and overall costs go up, or the young people (and older people as well) pay the fine and remain uninsured until they need insurance (in the ambulance on the way to the hospital) and overall costs go up.

18 Comments:

At 9/24/2010 8:32 AM, Blogger juandos said...

"it seems like any real cost containment in the health care overhaul is pure fantasy"...

Isn't all the legislation passed by this Congress and wanted by this administration based on fantasy?

Opinion piece from the Washington Examiner: Obamacare is even worse than critics thought

From the AEI magazine: Still No Good News for ObamaCare

 
At 9/24/2010 8:34 AM, Blogger Ironman said...

MP - Unless I'm misreading the post, you might need to change the last word of the title from "Insured" to "Uninsured".

Also, here's a tool that gets into the math behind why gaming the guaranteed coverage system would actually encourage individuals, and especially young individuals, to go uninsured.

 
At 9/24/2010 8:46 AM, Blogger Mark J. Perry said...

Ironman: Thanks, the title was incorrect, I fixed it.

Mark

 
At 9/24/2010 8:47 AM, Blogger juandos said...

Well as usual the ironman has yet another worthy post...

Good stuff sir!

From the Tax Foundation: ObamaCare and income redistribution

 
At 9/24/2010 9:32 AM, Blogger Bill said...

The question to me is are all of the manifest faults contained in this law the result of typical leftist economic illiteracy or is the law in fact designed to be a stalking horse for totally socialized medicine. In other words, the left is attempting to make the situation worse so they can then come in and "save the day" with fully socialized medicine.

 
At 9/24/2010 9:42 AM, Blogger Buddy R Pacifico said...

What is the likelihood that some or all of Obamacare will be repealed? Surprisingly good but the Individual Mandate will be the toughest.

BTW, Ironman's tool is very informative.

 
At 9/24/2010 9:58 AM, Blogger morganovich said...

bill-

i think it's more insidious even that that.

they are trying to drive the for profit guys out of business so them can call it a "capitalist" failure and push big government.

they force increased coverage to push up rates. then they force community pricing to encourage bad behavior from customers. then the limit the cost of policies with the "cadillac" tax.

the price limit is the cliff to push insurers off of, the requirement hikes are the bulldozer to push with. add in inflation and it just becomes a matter of when, not if, all the for profit guys get driven out of business.

i fear that even worse than not wanting to waste a good crisis, we have now moved on to manufacturing them to make policy change possible.

 
At 9/24/2010 10:03 AM, Blogger Michael Smith said...

No one believes that "Obamacare" will "bend the cost curve downward" of achieve any of its alleged savings and benefits -- not even the Democrats. If they did believe it, they would have made it effective immediately, so that the law's wonderful effects could help them win the next election.

Instead, they've postponed the effective date of most of the law's provisions until AFTER the next presidential election in 2012. So the whole thing is a lie perpetuated in hopes that the American electorate would be stupid enough to think the Democrats have handed them something for nothing. Unfortunately for the Democrats, the American people by and large are much too smart to believe in something for nothing.

 
At 9/24/2010 10:06 AM, Blogger Dan said...

Until hospitals have the right to refuse service to the uninsured or those who can not afford the cost of medical treatment, than there should be an insurance mandate. The costs of serving the uninsured are being distributed to taxpayers and those who have insurance anyhow.

 
At 9/24/2010 10:06 AM, Blogger Dan said...

This comment has been removed by the author.

 
At 9/24/2010 9:53 PM, Blogger Hydra said...

So they purchase insurance and insurance costs go up or they don;t purchase insurance until they need it in the ambulance (and cannot get it) in which case government or external costs go up.

Total Cost = Production Cost + External Cost + Government Cost.

Why is it such a surprise that when you get more coverage you pay more for it? I'd rather see people forced to pay for something and get it than the previous situation where you paid for something and often did not get it.

Sorry, but I believe that preventing such stealing is a legitimate conern of government. It is protecting peopls right to property that they bought and paid for. The insurance companies have to make more payments to older people and they get more customers and more payments to do it with.

How is this any differnet from requiring young people to buy and wear seat belts?

 
At 9/24/2010 9:58 PM, Blogger Hydra said...

"Until hospitals have the right to refuse service ....."

=================================

Well we cnnot make them provide service when they simply do not have the resources. Look at any third world refugee hospital or what happens during a disaster: hospitals call rationing triage.

But this is the case where having the right to refuse payment isn't he same as having the callous gall or the cojones to actually do it. In the real world those are gut wrenching decisions.

 
At 9/24/2010 10:03 PM, Blogger Hydra said...

"No one believes that "Obamacare" will "bend the cost curve downward" of achieve any of its alleged savings and benefits -- not even the Democrats. If they did believe it, they would have made it effective immediately, ..."

================================

Lowering costs is not the same thing as not providing benefits. We may well have more benefits at a higher cost: the question is whther the benefits are cost effective.

Had the Dems tried to make the changes immediately, they would not have been able to pass it, and anyway, a change this big takes time to implement.

 
At 9/24/2010 10:08 PM, Blogger Hydra said...

"Iit just becomes a matter of when, not if, all the for profit guys get driven out of business."

===============================

Nice conspiracy theory. I like it.


here is a test.

Canadians are buying lots of homes in the US, due to good exchange rates, cheap homes, and easier financing in the US.

How many of them give up their Canadian healthcare whne they come?

 
At 9/25/2010 9:28 AM, Blogger juandos said...

"Had the Dems tried to make the changes immediately, they would not have been able to pass it, and anyway, a change this big takes time to implement"...

Hmmm, a believer in socialized medicince...

Well as usual we can see that FEDERAL INTERFERENCE in the medical marketplace has driven up costs...

What Drives Up Health Care Costs? 10 Reasons

 
At 9/25/2010 5:09 PM, Blogger Hydra said...

"Hmmm, a believer in socialized medicince..."

We are talking about insurance, not medicine.

My doctor has never cheated me, but my insurors have.

 
At 9/25/2010 5:11 PM, Blogger Hydra said...

as usual we can see that FEDERAL INTERFERENCE in the medical marketplace has driven up costs...

================================

How can we see that? Costs were going up before, and cost are going up now.

The difference is that, now, costs are going up and so is coverage and benefits. We are paying more because we are getting more.

 
At 9/25/2010 9:19 PM, Blogger juandos said...

"We are talking about insurance, not medicine"...

No hydra we can't divorce one from the other today...

"My doctor has never cheated me, but my insurors have"...

How do you know that hydra, are you medical doctor also?

"How can we see that? Costs were going up before, and cost are going up now"...

No hydra the costs before federal interference was fluctuating with market pressures...

"The difference is that, now, costs are going up and so is coverage and benefits. We are paying more because we are getting more"...

Again you've made another statement that flies in the face of reality...

If you think I'm kidding go to a VA hospital...

Before that advent of EMTALA courtesy of an interfering federal government (what part of the Constitution mandates a federal presense in the medical marketplace?) there was Ted Kennedy and Richard Nixon and the HMO scam...

Google it...

 

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