Will Young Adults Pay for Health Insurance Under Obamacare?

Whitehouse.govWhitehouse.gov

The Obama administration hopes to sign up about 7 million people for health coverage through new insurance exchanges opening this fall as part of Obamacare. The most challenge part of that goal will be to sign up some 2.7 million young, healthy people the administration estimates it needs in order to balance out the risk pool, and keep premiums down for all. A new report on how young adults approach health insurance illustrates, perhaps inadvertently,how much of a challenge this will be.

The question for the officials in charge of marketing the health law is how to reach the hard-to-get young and healthy demographic that has traditionally shied away from coverage. What’s prevented them from obtaining insurance up until now? One idea holds that many younger individuals just don’t think insurance is all that important. They’re young and invincible. Insurance isn’t something that interests them.

But a new report from the Commonwealth Fund suggests that this may not be the best way to understand why young, healthy individuals avoid insurance. It’s not invincibility. It’s value. If they go without health insurance, it's often because coverage is just too expensive.

You can see this attitude on display in a Minnesota Public Radio report on efforts to convince young people to purchase coverage. The opening of the story centers on Robert Bauer a “young, lean, and healthy” 24 year-old graduate of the University of Minnesota. He works on an organic farm three days a week, and is uninsured. "I just don't think it's worth the money for me to get health insurance at this point," he told MPR.

That’s the sort of attitude that Obamacare’s enrollment push will have to overcome in order to succeed by the administration’s standards. The Commonwealth Fund suggests that Obamacare is equipped to overcome these challenges. 

Maybe. But in a lot of ways, it still looks like a tough sell. Partly because in many states, young people are likely to see big hikes in premiums for the cheapest available plans. “A 27-year-old, non-smoker would pay $135 per month next year for the state's cheapest catastrophic plan — the skimpiest level of coverage available through the healthcare law's new insurance exchanges,” The Hill reported this week. “That's about 140 percent more than the cheapest policy on the market today.”

Nor is Colorado the only state where individual premiums are projected to rise under the law. Officials in populace states like Florida and Ohio are also projecting increase in average premium prices, in part because the law mandates more expansive coverage than was previously allowed.

Obamacare has also created a bit of a problem for itself by allowing dependents up to the age of 26 stay on their parents’ insurance plans.

That provision has been in place for several years, and according to the Department of Health and Human Services, has resulted in coverage for about 3 million young adults already. HHS has billed this as one of Obamacare’s successes, but it limits the number of younger, healthier people who might be seeking out individual insurance on their own. In addition, those young people who are able to get coverage through their parents plans are more likely to come from relative affluence, and thus more likely to be able to afford insurance on their own.

The Commonwealth Fund’s report hopefully points to a big increase in coverage amongst the young following the implementation of Romneycare. “In the year following enactment of the Massachusetts health reform law in 2007, the uninsured rate of the state’s 19-to-26-year-olds fell from 21 percent to 8 percent,” the report says. But the Massachusetts system has also gone out of its way to attract young adults with special “Young Adult Plans” geared specifically toward 18-26 year olds.

The Commonwealth Fund report also notes survey responses showing that a large majority of young adults (about 67 percent) accept coverage when offered through work. But there's a big difference between accpeting coverage as part of a employment compensation package and buying it on one's own. 

What about the subsidies for buying insurance through the exchanges? The report points to those credits as a key tool for overcoming young adult cost concerns. “Subsidies,” it says, “will keep premium costs low for most young adults covered through the marketplaces.”

What counts as “low,” of course, is in the eye of the beholder. So let’s look at some numbers. Relying on a premium calculator put together by the Kaiser Family Foundation, the report notes that “on average, young adults earning about $15,000 will pay no more than $38 per month; those earning $23,000, no more than $121 per month; those earning $29,000, no more than $193 per month; and those earning $35,000, no more than $273 per month.”

Some young adults will probably look at these numbers and think: that’s a great deal. But my strong suspicion is that quite a few won’t. A nearly $200 per month payment for an individual making just shy of $30,000 a year isn’t exactly pocket change. Indeed, it’s a pretty significant commitment. That’s about the price of a monthly loan payment on a brand new Toyota Corolla. How many young adults in that salary range are ready to shell out that kind of money for coverage? Especially when the alternative, next year, is to pay a $95 annual fine—a fine the IRS can’t even collect, should you choose not to pay it, unless you have a big enough tax return for them to deduct from. And when open enrollment on the exchanges starts again just a year later, meaning the decision to go without coverage can always be changed sometime down the road?

To be clear: I’m not saying that anyone should skip out on buying health insurance. That’s an individual decision, and young adults are more than capable of making it on their own. But I do think it’s worth asking, given what we know about the decisions they’ve already made, and the pocketbook priorities for many in that age group, how many young adults—many of whom have already decided to go without coverage due to cost concerns—will prove willing to pay those sorts of prices. And how many will, like Robert Bauer, simply decide that it’s not worth it, right now, because the price is too damn high? 

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  • Libertymike||

    Where's FoE?

  • Anonymous Coward||

    The child-slaves in his toxic waste factory won't beat themselves.

  • anon||

    I beat myself off plenty when I was a child.

  • Anonymous Coward||

    Disciplining the workforce is more important than being first.

  • Hyperion||

    So true, this. Monocles don't polish themselves, after all.

  • Hyperion||

    Therefore, I think FOE is on the hook to go over to my textile mill and beat my workers for a while, since I am posting here right now.

  • Dweebston||

    It is simpler to work from home when your home is the grotto filled with bunkbeds under the factory.

  • Drake||

    I thought Obamacare rules were going to kill traditional catastrophic insurance? That is all I ever had while in my 20's.

  • Adam330||

    I believe there is an exception for plans offered to people in their 20s.

  • ||

    Yes, catestrophic-only coverage is allowed for people in the 18-30 range. But it still has to provide the same free preventive treatments and have no lifetime maximums etc. So the cost for that is going up as well.

  • Slocum||

    Paying the $95 penalty and then signing up for insurance only when you need it IS now the new low-cost catastrophic plan for 20-somethings.

  • JWatts||

    I haven't heard that and I'd be surprised if it was true. One of the operating principles of Obamacare is forcing young healthy people to subsidize the rates of older and/or unhealthy people.

  • ||

    It should be legal for everyone, not just 20-somethings. Plenty of 30-somethings don't have any health problems either.

  • Wintergreen||

    Catastrophic in name only. Catastrophic plans still must have a $6,350 annual out of pocket max and also must provide some level of cost sharing for three office visits even if the deductible has not been satisfied. The claims experience of catastrophic plans must be included in each insurer's single risk pool for the individual market. I've heard anecdotes of catastrophic plans from some carriers that are actually more expensive than their bronze plans (the lowest level of coverage allowed in non-catastrophic plans).

  • Curtisls87||

    Story: Government doesn't understand market forces - again.

  • some guy||

    The opening of the story centers on Robert Bauer a “young, lean, and healthy” 24 year-old graduate of the University of Minnesota. He works on an organic farm three days a week, and is uninsured.

    He'll be easy to convince because I'm sure he'll qualify for some massive subsidies with a job like that.

  • From the Tundra||

    Any guesses on degree? I'm gonna go with Philosphy.

  • Hyperion||

    Feminist Studies?

  • John||

    Puppetry or some kind of hate studies.

  • some guy||

    Multidisciplinary studies. No department wanted this guy.

  • goneGalt||

    Wait! You need a f*ckin degree now to work on a farm!? Us HS grads are soooo screwed.

  • LynchPin1477||

    I actually heard this story. I think he was accepted for a graduate program in soil science or horticulture...something like that.

    I listened to Morning Edition two days in a row waiting to hear their feature on the detention of Miranda. Instead they decided to do a promo for Obamacare. I'm not sure why I was shocked, but I was.

  • From the Tundra||

    The only MPR I can stomach anymore is the Current. Even in an all music format, though, they still manage to work in their proggy talking points.

  • NotAnotherSkippy||

    Oh come on: No Rant, No Slant. Carri Miller has on a diverse range of guests from the NYT, The New Yorker, and The Atlantic. And Paul Huttner's global warming Science(tm) comes straight from the MPR WeatherLab(tm), i.e. his den.

  • ||

    I'm not sure why I was shocked, but I was.

    http://www.youtube.com/watch?v=YUKmq7UMJys

  • Lord Humungus||

    Out of college, my first job offered a nice health benefits package that I only had to use once - when I broke my ribs. Even then, it wasn't much of a bill for a x-ray and some painkillers. Spending $$$ for insurance - especially out of my own pocket - would be something I would never even consider at that age. I would rather spend that money on a nice truck.

    Heck, even in my middle-aged, I still hate paying for the chunk of the 80/20 at my current digs. I just don't consume that much (yet) in medical costs. *knocks on wood*

  • Palin's Buttplug||

    I had an emergency appendectomy at 22. Eight days in a very expensive hospital.

    That procedure is very common at that age.

  • some guy||

    That's why everyone should have a catastrophic plan.

  • Hyperion||

    But, how can only a catastrophic plan pay for everyone elses healthcare? Why do you hate the poor children?

  • some guy||

    I don't hate the poor children. I hate the entitled dicks they grow into. See my Obamacare replacement plan below.

  • Lord Humungus||

    sucks to be you.

  • ||

    So did I. I had a high-deductible plan and ended up paying, all told, around $6,000 for it, after the insurance company negotiated the fees down.
    Which was much less than my student loans.

  • ||

    Spending $$$ for insurance - especially out of my own pocket - would be something I would never even consider at that age.

    It's all "out of your pocket" at the end of the day. The health benefits you were given by your employer were nothing more than lost wages you could have allocated yourself.

  • ||

    This could totally be a test to see if an acquaintance is smart enough to be worth knowing better or not. Are you under 30, without insurance from your job, and without a chronic illness? If so, have you chosen to purchase individual health insurance to comply with PPACA? If so, kthxbai.

  • ||

    They could be worth knowing, because you'll know if they have that kind of spare cash and are that gullible, they will be easy to mooch off of.

    I know this girl who buys tire insurance and spends $5,000 for her cat's surgery. That's the kind of person you want to be around.

  • ||

    So you hate kittens as well as children?
    That's how I read your comment...

  • ||

    I spent that much on a couple of surgeries for my cat and would do it again in a heartbeat. Having a different subjective sense of the value of your pet than the next guy doesn't make you a sucker. I wouldn't let my kid or my parents die for want of 5 thousand bucks, and I wouldn't let my pet either if I could at all afford it. Call me a loser shut-in or whatever, but valuing a companion animal more than 5 thousand dollars isn't inherently irrational, because it's a subjective judgment.

    Paying thousands of dollars for insurance instead of paying a small fine and then being able to get the insurance anyway at the first sign of illness is, in economic terms, irrational. So it's not a great comparison.

  • ||

    (I say "my kid" in the abstract sense since I don't actually have one, but you get the idea).

  • Hyperion||

    The 20 and 30 somethings that I work with are either going to pay a massive increase in premiums so that I can retire early and drink beer all day, or they get to pay the penal-tax. They love their great master, Obama.

  • some guy||

    The smart ones will choose the penal-tax. The idealists will subsidize your dying ass.

  • From the Tundra||

    I'm kind of drawn to the idea of having the useful little idiots subsidize my golden years beer-drinking. Thanks, Hyp - I think I gotta give this a closer look.

  • Hyperion||

    A negative commentary about the Hildabeast, in Salon?

    Is Hillary really the best we can do?

    I can't actually read the article, but I imagine that this woman probably thinks someone like Warren is the best candidate.

  • anon||

    If I were that ugly, I would not have my photo be the first thing my reader views.

  • some guy||

    That should be a thumbnail at the bottom or not present.

  • ||

    She looks like a slightly more burned out version of Ian Brown

  • John||

    I think the Hildebeast can only win if she intimidates the other serious candidates into not running. The thing about the Hildebeast is that while she acceptable to most of the party she is very few people's first choice. Blacks would rather vote for Corey Booker. Hispanics would rather have one of their own. The green/socialist retard block would rather have Warren. The few white working class voters self hating enough to still be Dems would rather have Biden. All Hillary really has is the feminist vote and a lot of them are also part of the retard block and would rather vote for Warren.

    How does she build a coalition? I think she has to make sure no black candidate runs and she uses Obama's endorsement to win blacks and feminists. But even then it might be close if the field is crowded.

  • ||

    Jesus Christ.

    Elizabeth Warren?

    The (my grandmother told me I had high cheek bones ergo) Indian?

  • Calvin Coolidge||

    Yeah, Liz. So you might run for president. Good for you!

    Now, let me ask you something. How could you run - for anything - without ROADZ? You need ROADZ to go anywhere. And who builds those ROADZ? Well, just like only a village can raise a child, only a government can build a road. It's in the Constitution!

    Did you know that 86& of the Federal Government's annual outlays are for ROADZ!? That is why you always hear Progressives bragging about what good condition they all are in! You woudn't get this kind of quality if the government let you build your own road - rest assured of that!

  • NotAnotherSkippy||

    Plenty of women will vote for her just because they all have vaginas. Unfortunately I'm related to at least one example of that thought process.

    That said, I have to believe we'd be better off today if she had won in 2008.

  • some guy||

    Here's my plan to replace Obamacare:

    1. All children up to the age of 18, inclusive, are covered 100%. (Single-payer, funded from the general fund)
    2. All adults are covered 100% for any illness or complication of an illness they developed while under the age of 19. (same as above)
    3. Medicaid to be phased out over 5 years.
    4. Medicare to be phased out over 20 years.
    5. All other regulations repealed including employer tax breaks, income tax deductions, etc.

    This way the truly unlucky are covered and everyone else gets a taste of personal responsibility. I figure you have to phase out Medicare and Medicaid because people have come to depend on them and have paid to cover them in the past.

  • LynchPin1477||

    I'm OK with having a guaranteed minimum coverage plan for kids. It's not as ideal as if it were run by private charities, but I don't think kids should have to pay for their parents' mistakes. But there should be room for hard working, successful people to give their kids something more. I know that in the case of my parents, grandparents, and even great grandparents, that was a huge motivator for them a big reason why they worked as hard as they did (not healthy care in their case --- education --- but same idea).

    Having said that, a per child voucher system that could then be spent on the open market is vastly preferable to a government run insurance system.

  • some guy||

    That works too. But single-payer for children doesn't prevent parents from paying for treatment that is denied by the single-payer program.

  • ||

    But, children don't vote.

    You'll never get elected this way. You have to flip it around: 100% coverage for the AARP, and everyone who doesn't like needs to go on a "stop hating grandma" guilt trip. I mean, she's old. And she did stuff so that you, and this great country, could be here for you. So fucking pay up and shut up.

  • ||

    This is a great analysis. The conclusion I think is something like "there wont be enough young healthy people paying more in premiums than they are paid in benefits to balance out the older group that will presumably be paying less than they are paid in benefits.

    This was obvious from the start to anyone with even a tiny knowledge of how insurance works.

    Unfortunately Obama and the "experts" he relied on are not savvy enough to have foreseen this (or didn't care and set this up to fail). Either way, not presidential material in my opinion.

  • John||

    They were stupid. They had no idea what they were doing. But once they started they had to pass something no matter how bad.

  • ant1sthenes||

    They didn't want legislative blue balls.

  • JWatts||

    I don't think they were stupid. I think they knew the numbers didn't add up and didn't care. They wanted to push it through and get a large percentage of the population hooked on the subsidies. At that point, they assumed there would be a solid voting block willing to raise taxes enough to cover the difference.

  • ||

    That and they can point to the failure of this market-based solution as an excuse to get single payer. Recall that Obama is, err, was a proponent of a single-payer universal health care system, at which we may not arrive immediately.

  • ant1sthenes||

    a fine the IRS can’t even collect, should you choose not to pay it, unless you have a big enough tax return for them to deduct from.

    I wonder if this will prod some people into changing their withholding to the minimum they can get away with without penalty...

  • John||

    I am sure it will. And if they ever up it, the SCOTUS is free to relook the penaltax issue. I sometimes wonder if Roberts isn't just a evil genius and wrote that decision so he would both be accepted by the liberal elite and ensure that Obamacare is an even bigger train wreck than it would have already been.

  • PH2050||

    Damn. That would be devious as hell. And awesome.

  • NotAnotherSkippy||

    No, Roberts was a moron on this decision. Lessee, it's not a tax so therefore we can rule on it just to rule that is is, in fact, a tax. F- for logic and consistency.

    You need to realize that Obamacare can't fail. If it misses cost "savings" targets it's the fault of evil capitalists in the medical profession and we need more taxes to care for the needy. Oh, and single payer!!!!! 'Cause Medicaid and Medicare single payer have certainly contained costs.

    If coverage targets aren't met that's a failure of obstructionist Republicans. And that's true even if it fails to meet targets in the terrestrial edens of CA, IL, MA, etc.

    Obamacare would have to have televised fortune telling (global warming models?) using fresh infant entrails before it will be recognized for the boondoggle it is.

  • Sevo||

    "I wonder if this will prod some people into changing their withholding to the minimum they can get away with without penalty..."

    'Way back when, CA's interest on late income tax payments was some good-sized amount lower than what banks were paying on deposits; CA didn't have withholding.
    I filed every year but never paid; just stuck the money in the bank. They finally changed the rates and I paid, but I made some bucks in the process.
    Yes, even folks in their '20s can count.

  • ReganT||

    When I was in my 20's I had no idea what health insurance cost. I didn't make my decision to forego purchasing insurance because it was too expensive. I never looked into it because it was something that I didn't think that I needed.

  • ReganT||

    When I was in my 20's I had no idea what health insurance cost. I didn't make my decision to forego purchasing insurance because it was too expensive. I never looked into it because it was something that I didn't think that I needed.

  • Adam330||

    "It’s not invincibility. It’s value. If they go without health insurance, it's often because coverage is just too expensive."

    Isn't this the case with ANY product or service? Even things I really really want, I'm not willing to buy when the price gets too high. And for things I don't really want too much, I may buy anyway if the price is really low or free. A blanket statement that young people don't want to buy X seems remarkably stupid without specifying the price of X.

  • The Late P Brooks||

    "I just don't think it's worth the money for me to get health insurance at this point,"

    Children are not capable of making economically rational decisions.

  • Jose Chung||

    This is a 24 year old adult, legally capable of voting, purchasing alcohol and tobacco, and being handed a powerful weapon and being sent to a war against his will. If this is a person incapable of making economically rational decisions based on age alone, I put it to you that no one is.

    His real problem is economic illiteracy and a dearth of critical thinking skills, likely (and this is purely speculative) due to the curriculum priorities of the schools he has attended and the inability or unwillingness of his parents to pass on those skills.

  • Dweebston||

    The most challenge part of that goal will be to sign up some 2.7 million young, healthy people the administration estimates it needs in order to balance out the risk pool, and keep premiums down for all.

    Except for, you know, the young people who don't yet need to buy into this scam.

  • The Late P Brooks||

    His real problem is economic illiteracy and a dearth of critical thinking skills

  • The Late P Brooks||

    Declining to spend thousands to possibly save hundreds is not an economically illiterate choice.

  • Ann N||

    seems like simple generational theft.

    seeing as how social security is going to be dead in 40 years that makes SSI and obamacare both ponzi schemes for the young generation.

    its bad enough to screw over a generation on one ponzi scheme, but 2? thats a bit much.

  • John Thacker||

    The reason why it doesn't make financial sense for these people is that the regulations make it so. Not only do healthy people have to subsidize those with preexisting conditions (an argument that I understand), but young people have to subsidize older people, thanks to a provision in the law that young people can't be charged less than one-third of what the 55-64 set is charged (which seems unfair).

    They've made it illegal for young adults to get an actuarially fair deal. They can either have no insurance, or a bad deal subsidizing others.

    The National Flood Insurance Program makes up partially for its subsidized rates for people in flood-prone areas by overcharging people in low risk areas. Only those rates can be used, so people have the option between a bad deal or no insurance. Similar thing.

  • ||

    $200/month is not pocket change to me and I make considerably more than $30,000 per year.

    What I paid for health insurance as a graduate student on a $17,000/year stipend was around $60/month. It was a high-deductible ($10,000) plan.

    The plan offer by the school was around $100/month. I switched out of it because the high-deductible plan was cheaper.

    Had insurance been $100/month that probably would have been borderline. I might have stayed on the school's plan. Although, my understanding is that many colleges will no longer offer coverage because the cost to them has skyrocketed.

    I have no idea what kids without parents plans are going to do when they find themselves having to pay $121/month for coverage , and no plan offered by the school. Sign up for Medicaid maybe.
    Can you qualify for medicaid as a college student?

  • ||

    My guess is not. My guess is that health insurance will just end up being added to the stuff that college kids use their student loans to pay for.

  • BeBraveUSA||

    Will young Adults Pay for Obama Care? Of course they will if the Gov't subsidizes 95% of the cost. Most of these kids can't find full time employment. Its quite a stretch to think they will cough up $200 per month for the "good of the country". What a fargin mess!

  • darlajtyson||

    my friend's step-aunt makes $67/hr on the laptop. She has been unemployed for 9 months but last month her income was $21622 just working on the laptop for a few hours. Go to this web site and read more --------- w­w­w.w­o­r­k­2­5.c­o­m

  • GLK||

    If you think Healthcare is expensive now just wait until it's free.
    --P.J. O'Rourke

  • HTuttle||

    My plan uses the carrot to get the young to buy insurance. And ONLY the carrot. Unlike ObamaCare's exclusive use of a stick

GET REASON MAGAZINE

Get Reason's print or digital edition before it’s posted online

  • Video Game Nation: How gaming is making America freer – and more fun.
  • Matt Welch: How the left turned against free speech.
  • Nothing Left to Cut? Congress can’t live within their means.
  • And much more.

SUBSCRIBE

advertisement