New Study: It’s Cheaper for Young People to Opt Out of Obamacare than to Enroll

Posted: Jan 22, 2014 3:20 PM

Some House Democrats believe Obamacare is fundamentally sound. But if so, why has another study concluded that the individual mandate provision is seemingly flawed? In short, the law stipulates that those who do not have health insurance must sign-up for Obamacare or pay a penalty. But unfortunately for this administration, young people are already discovering that it’s cheaper for them to pay the fine than sign-up for an insurance plan they can ill-afford.

Question: How is this not a major problem for Obamacare supporters? From The Hill:

The conservative American Action Forum (AAF) released a study on Tuesday saying that the individual mandate penalty may never be substantial enough an incentive to get young adults to buy into the ObamaCare exchanges.

The study finds that after accounting for cost-sharing and subsidies in 2014, it would still be cheaper for 86 percent of young adults to forgo coverage and to pay the individual mandate instead.

That percentage decreases to 71 in 2015, and 62 in 2016, as the individual mandate penalty goes up.

“Even after the mandate penalty is fully implemented, a majority of young adult households will find that it is financially advantageous for them to forgo health insurance, pay the mandate penalty, and personally cover their own health care expenses,” the study says.

Hence why the administration is running ads during the Winter Olympics encouraging “Young Invincibles” to sign up. Without younger, healthier Americans enrolling in the exchanges, the law cannot sustain itself; after all, someone has to pay for all those older, sicker people signing up for coverage. The question here, though, is whether or not most young people are even aware that it’s in their best interest, financially, to forgo health insurance altogether, the risk of a catastrophic accident or diagnosis notwithstanding. Meanwhile, of course, the administration is behind schedule getting them to sign up, and they have a very long way to go:

Health and Human Services (HHS) reported earlier this month that 24 percent of ObamaCare’s enrollees are young people. A Kaiser Family Foundation report released last year estimated that number needed to be around 40 percent for the law to work optimally.

Older people, who are typically more expensive to cover, made up the single largest group of ObamaCare enrollees.

That’s not a very good sign. And yet the administration is still optimistic they can exceed this threshold before April 1:

The Obama administration says it expects young adults to sign up in higher numbers before open enrollment ends on March 31, as many observers expected younger and healthier people would put off enrolling until the last second.

It was also expected that some of the nation’s sickest people who were uninsured would rush first to the new exchanges.

If you buy that argument, a lot of older, sicker people have already enrolled; we’re just waiting for younger Americans to do their part over the next couple of months. But if they do, they might just come to wish they hadn't -- especially when they see how much "affordable" health care really costs.

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