NCPA - National Center for Policy Analysis

How ObamaCare Rips Off the Young

November 19, 2013

When ObamaCare is under attack, its defenders retreat to several well-worn claims. Among them is a provision that compels insurance companies to allow parents to keep their "children" ages 21 to 26 on their family policies. Yet this part of the Affordable Care Act was not engineered in response to any noticeable interest group. Instead, political considerations are responsible for the provision -- which is an unnecessary and a deceptive ripoff of the "young healthies," says Carl Schramm, president and chief executive officer of the Kauffman Foundation.

One consideration is that young adults facing chronic unemployment commonly return to their parents' home. The Obama administration sought to avoid a potential political storm by providing a benefit normally connected to holding a job for one of its most reliable support groups.

Another consideration is that ObamaCare's financing won't work unless "young healthies" (or their parents) pay through the nose for coverage under parental plans or via the individual mandate. The 18 to 26 age group is the lowest user of care, the least costly to cover and the most profitable of all health-insurance coverage. Yet the group faces extraordinarily high ObamaCare rates.

  • A Manhattan Institute analysis of Health and Human Services numbers notes that a 27-year-old male will pay 99 percent higher premiums under ObamaCare than he would under previously prevailing market rates.
  • One reason 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.

Young men and women who pay a fine instead of buying coverage are not making an irrational choice. They know how little care they need and use. They also may be beginning to understand that the high cost of their plans reflects the redistribution of their wealth to older people and a bunch of mandated services that don't make sense for them.

Source: Carl Schramm, "How ObamaCare Rips Off the 'Young Healthies'," Wall Street Journal, November 6, 2013.


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