2013 December 24 Tuesday
Obamacare Raises Insurance Costs For Young People
A McClatchy story shows the GOP finally noticed the obvious: GOP Saturday message: 'Health care law is a bad product for young people'.
The goal of Obamacare in a nutshell: Shift costs from older to younger. Get younger and therefore healthier young people to sign up to pay for health insurance that costs more than it ought to cost them given their lower risks. Then the profits from their policies can be used to subsidize older and less healthy people who get to buy lower cost policies than warranted by their risks.
The old age entitlements are already a big (and quite unsustainable) shift of money from young to old. The irony of this attempt to get more people insured by taxing the young: the net effect is going to be at least a 2 million decrease in the number who have medical insurance come January 1, 2014. This has led Obama to make desperate regulatory decisions that, btw, violate the ACA law (not that a President has to obey the law).
Months ago Megan McArdle outlined just how much the "Affordable Care Act" makes health insurance less affordable to young people. Hey, did anyone stop to think that young people make less money? Really, excepting engineers and investment bankers it is true.
Without the subsidies from "young invincibles" paying $150 a month for almost nothing, the older, sicker part of the insurance pool will have to pay more. The healthier ones may eventually decide that they simply can't afford it; better to pay the fine, tolerate the tiny risk of a huge ER bill, and count on the fact that you can always sign up for insurance if you get sick.
Megan provides some medical insurance cost scenarios in that article. She also has a a really useful article about many factors to consider when buying an Obamacare plan. What is kinda scary: some of these policies make it hard to live part of the year in 2 different states.
The individual insurance market has already been wrecked (i.e. really high prices) by rules that are similar to Obamacare's rules for making it easy to get coverage when you have existing medical conditions. I expect this price spiral will happen in some other states as well. Therefore you might find yourself in the situation where you do not get medical insurance from a job and can not afford to pay for an Obamacare policy.
What I would really like to know: Can one still buy a catastrophic medical care policy that is not an Obamacare approved policy? Suppose you are willing (or out of financial necessity are driven) to take the hit and pay the fine/tax for not having an Obamacare policy. Can you get a catastrophic coverage medical insurance policy?
What I would like to buy: a lifetime high deductible catastrophic medical insurance policy. I want the knowledge that 10 or 20 years from now if I get cancer I can go to the Mayo Clinic or the MD Anderson Cancer Center to get the best treatment. No matter what the people in Washington DC do I want to be able to get the best medical care.
Does any reader know much about the current state of play with catastrophic medical insurance? Can one get coverage that will free one from being shackled to an employer and shackled to residence in a particular state? I want full labor mobility and no worries. Is this possible in the US of A going into 2014?
By Randall Parker at 2013 December 24 09:38 AM
"Is this possible in the US of A going into 2014?"
I think the Democrats were hoping to shore up their support among the old but counting on the stupidity and idealism of the young.
"This has led Obama to make desperate regulatory decisions that, btw, violate the ACA law (not that a President has to obey the law)." Where have I heard this before? Oh yes, now I remember: "When the president does this, it's not illegal." - Richard M. Nixon.
I take a long and somewhat contrarian view of American politics, which I would evaluate as somewhere between amusing and disgusting. The Democrats have done themselves far more damage than Mitt Romney and the Republicans ever could have. Their key piece of legislation from Obama's first term is melting down right before their eyes, and they don't know where to turn. If the Republicans are smart (a big "if," I admit), they will try to pass legislation "fixing" all the rotten features of Obamacare. This will probably not get out of the Senate, and if it does, Obama will surely veto it, but it will force the Democrats into the uncomfortable position of supporting the unpopular status quo or admitting that the Republicans were right all along. What a happy choice!
Democrats are already bailing out on this one, especially those facing election next year. It seems that all that is necessary is to give the Democrats enough rope and they will surely hang themselves. Still, I wouldn't put it past the GOP to snatch defeat out of the jaws of victory.
We can't expect much from the GOP.
Do you know anything about catastrophic medical policies that are not Obamacare approved? Can they still be sold even though they do not cover a person from the Obamacare tax on the uninsured?
Obamacare is still hiring commercial insurance companies to insure the impoverished. And the basic health care system is still the same hospitals, the same doctors, the same drug companies, the same medical instrument manufacturers, etc.
What the government should have done is to create a new economy within the economy, where there would be government-owned medical schools, government hospitals, government drug companies, etc, to provide much cheaper medical care. Although the average quality of medical care provided by this second-tier health care system dedicated to the poorer 50 %, will be inferior, it will be not be terrible compared to the standards of medical care 30 years ago. The trouble is that the medical industry generally stops manufacturing older generation medical instruments as soon as new generation instruments are approved, but the older generation treatments are often only slightly less effective than the newer treatments, but the new treatments are often much more expensive, at least initially. For this reason, such a fully government owned health care system that provides cheap but only slightly downgraded medical care would be highly effective, if only some medical schools, hospitals, drug companies, etc, were government-owned.
In other words, Obamacare has not yet taken action to provide competition against the insurance companies and for-profit medical companies and doctors.
"Do you know anything about catastrophic medical policies that are not Obamacare approved? Can they still be sold even though they do not cover a person from the Obamacare tax on the uninsured?"
Sorry, I don't know anything about this.
Another factor is the enormous profits of health insurance companies, which means that the insurance premiums are very high for a lot of people due to lack of competition.
But if the government creates a non-profit health insurance company that is designed to break even, then this might significantly lower the insurance premiums for many people.
The higher the total annual profits of health insurance companies, the more expensive the insurance premiums become.
It's the perfect crime. So brilliant Dems should have done it years ago.
Younger workers are naturally socialistic, so they will grudgingly pay half their income to keep the Boomers comfortable for many years in many ways.
But no catastrophic insurance over 30.
No ACA-approved catastrophic insurance over age 30. But suppose you want to buy catastrophic insurance and then pay a fine for not having an Obama-approved policy. Can you do it?
How much are the total profits of the health insurance companies? How do they compare to the 18% of GDP that goes to health care in America?
All non-ACA compliant health insurance must end in 2014. But some plans may not officially be categorized as health insurance, if you can find them.
The total profits of the health insurance companies are hard to estimate clearly because of the book keeping tricks that they use. For instance, the health insurance companies often raise the salaries of their employees as their revenues increase, and then they report less profits officially, but the gains still go to the pockets of the many thousands of executives.
But if the government creates a non-profit insurance company with LOWER executive profits (of course, you have every right to laugh at this suggestion, since legislators will raise the salaries of their friends who work for the companies that are their friends, but this is another story) this would substantially lower premiums.
But my main point is that if the government also creates non-profit medical industries and medical schools that are owned by the government, etc, then it would be possible to provide relatively very cheap but acceptable medical care for the majority, even though this kind of medical care that relies on older generic drugs, older generation medical instruments will be inferior to the most modern medical care, it is important to note that it will still be comparable to decent medical care that existed only 30 years ago. One reason the cost of medical care is so high is because as soon as a new generation treatment or medical instrument is approved, the old technology is often withdrawn from the market in order to make room for the new products, but the newer treatments are often much more expensive even though the older treatments and older generation instruments are often only slightly inferior. Thus, if a second-tier medical economy is created with lower paid doctors (government employees trained in government medical schools) and cheaper instruments, etc, the cost can be lowered quite substantially with only slightly inferior treatment equal to the quality of good medical treatment that existed 30 years ago.
So far, Obamacare did not make any attempt to create this kind of competition in neither the medical industry nor the insurance companies.
Not just young people, young males are the target. Obamacare is a man-tax.