An integral part of the Affordable Care Act is courting the “young invincibles,” but getting the 18- to 29-year-old demographic on board is proving to be a challenge.
Polls show young people think they aren’t at risk for illness and injury and would rather pay a fine than comply with the ACA’s individual insurance mandate and buy an insurance policy. But that approach is short-sighted, experts said, and a lack of participation from young Americans could mean higher costs for those who do comply with the law.
The insurance mandate, an integral part of President Obama’s signature health care legislation, compels uninsured individuals to use an online marketplace to compare premium prices and buy a plan that offers a number of mandatory services. Those who don’t sign up face a penalty of 1 percent of their income or $95, whichever is greater.
Getting the “young invincibles” on board with the plan could help equalize costs for everyone in the insurance pool. In a pool dominated by older, higher-risk individuals, premiums could naturally skyrocket, and the older population would put upward pressure on premiums that are not offset by younger, lower-risk people.
As individuals enter the pool, said Sam Cappellanti, health care policy analyst at the American Action Forum, the cost of insurance should fall for older individuals. But costs will have to rise for the younger generation, he said.
“It’s going to affect them disproportionately more than any other age group,” Cappellanti said.
Last month, Cappellanti conducted a study to analyze the cost-benefit analysis for younger people in the insurance pool. He determined the least expensive plan — supposedly the most attractive for this age group — will increase on average by more than 200 percent of the cheapest plans that existed before the act was implemented. This is partially due to a mandate that enrollees meet certain service requirements even if they don’t need the services, such as prenatal care.
“That’s a significant chunk of change,” Cappellanti said. “We found that it’s just not financially advantageous to purchase coverage through the exchanges.”
However, Peter Beilenson, president and CEO of Evergreen Health Co-op, said certain parts of the law would help young people both adapt to the costs and get health coverage they otherwise wouldn’t have had.
The new plans are separated into three tiers which are based on the level of coverage. The bronze tier offers the lowest coverage and lowest costs of all plans, while silver offers slightly more coverage and has a slightly higher monthly cost. Gold offers the widest coverage and has the highest costs. Lower-income people can qualify for subsidies to limit many of thoses costs, Beilenson said.
“With the subsidy, it’s quite manageable,” Beilenson said.
But soon, these individuals will have to make a choice: Either pay for coverage or pay the penalty incurred for not being covered under the law’s individual mandate. However, Cappellanti said this choice would be easy. For many young people, he said, the costs of coverage would be much higher than the penalty.
“It just makes a lot more sense for those people to pay the penalty,” Cappellanti said. “The penalty is so small in many cases … that it just doesn’t really provide the effect that’s necessary.”
But Beilenson said the decision isn’t that simple.
“If you’re making $30,000, you’re either going to pay $300 in your taxes and get nothing or pay $900 or so and get decent health coverage — that’s the calculus that people are going to have to make,” Beilenson said.
It is better for young people to pay for coverage, though, because while they may think they’re “invincible,” that isn’t true, he said.
“I can’t tell you how many patients I’ve had who have developed melanoma at 18, who have been in a motorcycle accident at 26, who have gotten depression at 29,” Beilenson said. “All of these things, if you don’t have coverage … you’re putting yourself and your family at risk.”
It’s true that lower-risk people, like most young people, will help finance cheaper care for sicker people, Beilenson said. But in some way, he said everyone has helps shoulder a burden for someone else.
“Does it help subsidize the chronically ill and older folks? Of course it does,” Beilenson said. “But you could also argue that the taxes that have been paid by older people paid for the public schools of the younger people; that’s the way our society works.”
