California data show uninsured young single adults likely to be financially squeezed by Affordable Care Act
A mini-controversy has erupted over new California data that show uninsured young single adults are likely to be financially squeezed under the Affordable Care Act.
The dust-up began when Covered California, the state's new health care exchange, released a study of projected new rates that was meant to be encouraging. But critics soon latched on to an apparent sleight of hand.
"The rates submitted to Covered California for the 2014 individual market ranged from 2 percent above to 29 percent below the 2013 average premium for small employer plans in California’s most populous regions,” Covered California's press statement read.
“This is a home run for consumers in every region of California,” said Peter V. Lee, executive director of Covered California. “Our active negotiating will not only benefit potential enrollees to Covered California, but will benefit all Californians by making health care affordable.”
"OK," cut in W.W. Houston at The Economist. "But why compare rates on the individual market to premiums of small employer plans?"
Avik Roy at the Manhattan Institute latched on to this as well, arguing that Lee "was comparing apples — the plans that Californians buy today for themselves in a robust individual market — and oranges — the highly regulated plans that small employers purchase for their workers as a group. The difference is critical."
In fact, Roy argued, the new law would drive up premiums for single adults on the individual market between 64 percent and 146 percent, depending on age.
The sticker shock is going to be especially severe for young professionals earning starting salaries, argued Megan McArdle at The Daily Beast. Many of these are currently uninsured because they are so healthy that insurance does not seem necessary to them.
Those under the age of 30 will, under the new law, be allowed to get by with catastrophic insurance, McArdle notes. But this catastrophic insurance will be markedly more expensive than comparable options today.
"Anecdotally," McArdle wrote, "they seem to be expecting the kind of generous package that Mom and Dad have, at around the cost of their monthly cell phone bill. I don't think it's sunk in that Obamacare will force them to pay $150 a month for insurance similar to bare bones plans that are available right now in many states for $100 a month — which they've declined to buy."
Even avid defenders of the Affordable Care Act, like Ezra Klein at The Washington Post, acknowledge that young people will be subsidizing older and unhealthy people in the new system.
"When people talk about 'rate shock'," Klein wrote, "they’re applying a very odd kind of analysis to premiums in the exchanges: They’re counting the costs to the young and healthy and wealthy but ignoring the savings to, well, everyone else. And they’re also, and more importantly, ignoring the subsidies."
But McArdle countered in some detail that the subsidies for young single adults are quite meager and taper off altogether the relatively low salary. This is not surprising, she notes, given that the subsidies were constructed for families with children.
And while it may be true, as Klein and others have argued, that healthy young people today will be benefit from the cost-shifting as they age, McArdle's argument is simply that young people were not psychologically prepared to see their rates skyrocket.
Eric Schulzke writes on national politics for the Deseret News. He can be contacted at firstname.lastname@example.org.
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