YOUNG AND HEALTHY? BE READY TO PAY UP.
Now that the Affordable Care Act (ACA) is actually being implemented, many Americans are not pleased with the law. One population of Americans that has begun to grasp the real import of ObamaCare on their lives is young adults. These people are the ones hardest hit by the law: Although they are currently least able to pay for the rising costs of health care, they are the most healthy and so have been made to subsidize health care for the older and less healthy populations.
So, what should we have known about the impact of the Affordable Care Act on the young and healthy adult population in South Carolina before we took federal funds to implement it?
What once stayed between you and your doctor will now go in a database.
The concept of doctor patient confidentiality is a wash. The data hub created under the the ACA will allow federal bureaucrats access to medical records through the patient’s insurance company. The insurance company will obviously get access to your medical records through your physician, who gets it from you. Answers to simple questions – do you smoke? do you drink? do you use, or have you ever used, illegal drugs? – and many others like these will all be available to the government. What choice do people have, then? They can tell the truth and fear what unknown consequences will stem from their responses, or they can in effect lie to their physician in order to protect their privacy. The latter option could lead to a host of problems – doctors may, for instance, find it difficult or impossible to properly treat some medical problems.
Just because you’re under 26 doesn’t mean you’ll still get coverage under your parents’ plan.
One big attraction of ObamaCare was that dependents could stay on their parents’ insurance plan until they were 26. Prior to the adoption of the health care law, most dependents were taken off their parents’ plan somewhere between the ages of 18 and 23. What many Americans weren’t aware of until the ACA took effect was that many adults (parents) could lose their current coverage due to ACA coverage mandates that their provider can’t cover, or from their policy being cancelled altogether and being forced to go into the exchanges where plans are more expensive. In South Carolina, an estimated 150,000 people have received notice that their policy would be cancelled in 2014.
This will leave these young adults to find their own insurance plans, and unless they’re eligible for Medicaid in South Carolina – which would mean they have to fit one of several categories including being between the ages of 1-18, pregnant, blind, disabled, or one of the other categories listed here – they’ll be required to sign up on the exchange or face a penalty.
The ACA does provide federal tax-credit subsidies for some eligible people purchasing insurance on the exchange. But the eligibility requirements for the subsidies leave both the poorest of the poor and middle-income earners to pay full price for these newly increased insurance premiums. This is because these tax credits are only available to individuals (but not all) making between 100 to 400 percent of the federal poverty level, which is currently $11,490 per year. Anyone making less than this amount – young people working part-time jobs, for instance, or students participating in low-paid internships or receiving semester stipends – will have to pay the full premium price with no subsidy.
Using the Kaiser Family Foundation subsidy calculator recommended for use by the official healthcare.gov website, we calculated the estimated premium costs and subsidies at different income levels for a 21-year-old non-smoker with no children living in Richland County, South Carolina, with no available employer coverage.
- Annual income: $0-$11,489. This person would receive $0 in subsidies and an go on the Silver Plan (mid-level of coverage). That plan’s premium is $2,523/year or $210.25/month. That would cost roughly 20 percent of the person’s total income before taxes.
- Annual income: $11,490. This person would get the highest subsidy of $2,293, meaning he or she would only pay $230/year for a Silver Plan.
- Between the incomes of $11,490 and $30,066, the subsidy gradually decreases from $2,293 to $1.
- Annual income: $30,067 or higher. This person would pay the full price of $2,523/year, the same as someone making less than $11,489.
Your premiums will go up.
If you have your own insurance policy, young adults should know that their premiums are going to skyrocket. A study by the Manhattan Institute of 49 states found that premiums will rise on average by 41 percent. According to the study, “the steepest hikes will be imposed on the healthy, the young, and the male.” A separate study by the Heritage Foundation found that average premiums for the young, older (50), and families are expected to increase in 45 states. Generally the youngest (the 27-year-old age group) are expected to see the biggest increases.
For one healthy 34-year-old in California, his relatively inexpensive catastrophic health insurance plan is no longer offered due to coverage mandates in the ACA. His closest option under the California health exchange would raise his monthly premium by nearly 43 percent.
The high costs of premiums will lead many young adults to question whether they should pay the higher cost for health insurance or pay the penalty for not getting coverage. In the first year, the penalty is calculated as 1 percent of your salary (or $95, whichever is higher). Many young adults who do not access the health care system very often will likely pay the penalty and hold onto what they can of their salary. A recent study by the National Center for Public Policy Research shows that about 3.7 million of those ages 18-34 will be at least $500 better off if they forgo insurance and pay the penalty. More than 3 million will be $1,000 better off if they go the same route.
Beyond 2014, however, the penalty steadily increases, and that decision will have to be made year after year: in 2015 it’s 2 percent of income or $325 per person, in 2016 and it’s 2.5% of income or $695 per person, and after that it is adjusted for inflation.
Young, healthy adults are subsidizing care for the elderly
The law was designed to force healthy, young adults – those who access the health care system least – to subsidize care for older Americans. The law prohibits insurers from charging elderly adults more than three times the rate the insurer charges young adults; this increases the cost of insurance for the young by 75 percent, while offering only a modest 13 percent subsidy to older Americans.
According to the Associated Press, insurers have warned that they need a wide range of people signing up for coverage because premiums paid by adults in the younger and healthier group, between 18 and 35, are needed to offset the cost of carrying older and sicker customers who typically generate far more in medical bills than they contribute in premiums.
Your job prospects will be negatively affected.
You won’t be the fiftieth employee at any midsize business. Many businesses won’t be expanding due to the employer mandate in the Affordable Care Act which enacts penalties on businesses with 50 or more full-time employees or full-time equivalents. Because of this mandate – which has been delayed until 2015 – many businesses have reduced full-time employees to part-time to remain exempt from the tax. While implementation of the employer mandate has been delayed until 2015, many businesses will still be leery of hiring full-time staff only to have to cut them a year later. Some business may close altogether due to the uncertainty of the effects this mandate and many others will have on their business. Ultimately, business decisions will be made based on health care requirements rather than the market.
The medical field’s ability to innovate will be harmed.
Since it props up a “third party system” (i.e. a system in which bills are paid not by the purchaser, or patient, but by insurance companies and/or government), ACA will further compromise physicians’ ability to innovate. With more government control over the insurance market and doctors taking less control over treatment decisions, doctors will be less likely to take risks and imagine new ways forward for patients. As the physician’s aim comes to involve government mandates rather than finding effective treatments for patients – in other words, as the goal becomes avoiding violations of regulations rather than actually treating people – expect the quality of health care to suffer.