“Personally, I believe Obamacare was written with generally good intentions. You might disagree. However, there’s less room in arguing how the Obamacare system was supposed to work.”
Obamacare is ailing. Headlines over the past few weeks have noted a “surge” in sign-ups. Members of the media aren’t lying, but they are trying to put lipstick on a pig. Obamacare has long struggled to attract the healthy, young people it needs to pay for the system. Now, the repeal of the individual mandate will likely cause even more healthy people to forgo health care. This, in turn, could cause a slow demise for an already struggling healthcare program.
It’ll be interesting to see the final breakdown in that “surge” of sign-ups. Most likely, people suffering from chronic conditions and poor health made up the bulk of the surge. While I’m glad said people will have access to health insurance, it would bode ill for Obamacare’s already tenuous financial stability.
More or less, the entire Obamacare system works by taking money from the young and healthy to pay for the sick and elderly.
I’m not going to get into whether that’s a good or bad thing. Personally, I believe Obamacare was written with generally good intentions. You might disagree. However, there’s less room in arguing how the Obamacare system was supposed to work. More or less, the entire Obamacare system works by taking money from the young and healthy to pay for the sick and elderly.
This is how most healthcare systems, including private insurance, work. Everyone pools their money together and then the funds are divvied up. Under such an arrangement, the young and healthy will always end up paying for those who are sick. Eventually, the young and healthy will end up falling sick or aging. In the long run, costs should even out.
Financially, Obamacare was always dependent on this notion. There was one major problem, however. The young have been avoiding healthcare. I say this as a young(ish) person who avoided paying for a healthcare plan. I wanted to, but plans cost several hundred dollars a month (over $300 for a “decent” silver plan) and didn’t provide good coverage.
I am one of the millions of so-called “young invincibles”, those young and healthy individuals needed to subsidize healthcare and balance out costs. These young invincibles are needed to make Obamacare financially stable. However, many healthy people aren’t signing up for healthcare.
There was one major problem, however. The young have been avoiding healthcare.
Instead, less healthy individuals have been signing up. Obamacare has cut overall uninsured rates from about 16% in 2010 to 8% over the past few years. However, uninsured rates among those from 18 to 45 remain stubbornly high, between 15 to 20%.
CDC uninsured data by age cohort
So yes, uninsured rates have declined. But that’s largely being driven by older, less healthy individuals who have a more dire need for healthcare. Young, healthy people, on the other hand, have been sitting out. As a result, Obamacare has grown financially unstable.
Consider United Healthcare, which lost hundreds of billions of dollars through Obamacare before ultimately pulling out.
The lack of healthy people signing up for healthcare helps explain why premiums continue to skyrocket. Even with premiums rising dramatically, many health insurers are struggling to produce a profit through the exchanges. United Healthcare, one of the largest health insurers in the USA, has pulled out of most healthcare exchanges. So too has Humana.
Under Obamacare, health insurers are required to cover “everyone”. This means the sick and unhealthy, who quite frankly, don’t make for profitable customers. Consider United Healthcare, which lost hundreds of billions of dollars through Obamacare before ultimately pulling out.
With the repeal of the individual mandate even more young people are going to forgo Obamacare and the financial situation will worsen for insurers and insurees.
Why Are Young People Avoiding Obamacare?
Quite simply, it’s expensive, and for many young people, Obamacare doesn’t provide good coverage. As a young person in good health, I haven’t been to the hospital in nearly a decade. I knocked on wood in 2016 and 2017, hoping that I wouldn’t end up needing healthcare services. Lacking health insurance created a specter constantly haunting me behind my back.
Yet had I bought a silver plan, I would have faced an extremely high deductible. I can’t remember the exact amount, but I believe it was $7,500. Essentially, I was going to be paying several hundred dollars a month for insurance I’d likely never get to use.
Paying the penalty wasn’t fun. However, it was still less than paying for health insurance. I made the same choice as millions of other healthy Americans. I rolled the dice and hoped I didn’t suffer an accident or serious illness. So far, I’ve been lucky.
I don’t say any of this, by the way, as a conservative, but instead a moderate liberal. Obamacare may have been well-intended. Ultimately, however, it was a poorly designed solution. With the repeal of the individual mandate even more young people are going to forgo Obamacare and the financial situation will worsen for insurers and insurees.
Unfortunately, this means that a number of older and less healthy people may soon find themselves lacking proper access to healthcare.
