NCPA - National Center for Policy Analysis


November 24, 2009

The House-passed health care "reform" bill mandates that health insurance premiums for older Americans be no more than twice the level of that for younger Americans.  That's much less than the actual health spending gap between young and old, says columnist Robert J. Samuelson. 

Spending for those age 60 to 64 is four to five times greater than those 18 to 24.  So, the young would overpay for insurance that -- under the House bill -- people must buy: Twenty- and thirtysomethings would subsidize premiums for fifty-and sixtysomethings. (Those 65 and over receive Medicare.)

Although premium changes would apply mainly to people using insurance "exchanges," the differences would be substantial, says Samuelson:

  • A single person 55 to 64 might save $3,490, estimates an Urban Institute study.
  • By contrast, single people in their 20s and early 30s might pay about $600 to $1,100 more.
  • For the young, the extra cost might be larger, says economist Diana Furchtgott-Roth of the Hudson Institute, because the House bill would require them to purchase fairly generous insurance plans rather than cheaper catastrophic coverage that might better suit their needs.

Whatever the added burden, it would darken the young's already poor economic prospects, says Samuelson:

  • Unemployment among 16- to 24-year-olds is 19 percent.
  • Peter Orszag, director of the Office of Management and Budget, notes on his blog that high joblessness depresses young workers' wages and that the adverse effect -- though diminishing -- is still statistically significant 15 years later.
  • Lost wages over 20 years could total $100,000; Orszag doesn't mention that health care "reform" might compound the loss.

Working Americans -- the young and middle-aged -- already pay a huge part of the health costs of the elderly through Medicare and Medicaid.  These will grow with an aging population and surging health spending.  Either taxes will rise or other public services will fall.  Already, all governments spend 2.4 times as much per capita on the elderly as on children, reports Julia Isaacs of the Brookings Institution.  Why increase the imbalance?

It's true that premiums for older people would be higher.  But this might have a silver lining: Facing their true health costs, older Americans might become more eager to control spending, says Samuelson.

Source: Robert J. Samuelson, "Health 'reform' that burdens our young," Washington Post, November 23, 2009.

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