Does Obamacare “screw” the young? The sexy subject of age rating was the topic of a silly article posted last night by Buzzfeed’s Ben Smith, which argued that the Affordable Care Act ran against the interest of the President’s base of young voters.
The premise was on the 3:1 “age rating” provision of the ACA, which limits premiums to the oldest person to no more than three times the premiums of the youngest (holding the same for plan type, geography, etc.) While some states have such limits on age rating, most states like California have none, and right now older Californians in the individual market are charged five or even ten times what younger folks are for the same plan.
One reaction was, as Matt Yglesias wrote in Slate, “today’s 25-year-old is tomorrow’s 55-year-old.” As Brain Beutler of Talking Points Memo writes, young people also support Medicare, because they have an investment in it for the future–even more than current beneficiaries, for whom changes are unlikely to have a huge impact. The advocacy group Young Invincibles also support the measure for their family members, and as a value. Their spokeswomen, quoted by Sarah Kliff of the Washington Post, says “Those are our parents, our grandparents, and someday us. We want to keep coverage affordable for everyone.”
These are all good defenses of age rating limits. Young people care about others, including family members. They care about fairness. They care about themselves when they get older.
But my main reaction was that the article blithely ignored the rest of the Affordable Care Act. We tweeted soon after it was posted:
We appreciated the response:
The sentence that was added was in parentheses, because it seemingly undermined the entire headline and point of the article:
(There are also provisions yet to come that benefit the young; subsidies for people buying insurance on the individual market are expected to be disproportionately used by younger people.)
Yes, there will be a relatively small number of young, healthy, and wealthy people who somehow don’t get job-based coverage who may end up paying more in 2014 (and for whom the benefit comes when they lose those blessings). But young people, by definition–as they are just starting their careers and in entry-level jobs (even if they are on a trajectory to make more in their future)–are mostly lower-income. They are the most likely to be in the jobs that don’t offer health coverage, and mostly likely to qualify for subsidies in the new exchanges, like Covered California. In the exchanges, they will be given subsidies so they don’t have to pay more than a percentage of their income (on a sliding scale, from 2-8%) for premium for a basic health plan. If a plan costs more than that percentage, the premium makes up the difference.
So most people will continue to have employer-based coverage, especially those with higher incomes. Those under 400% FPL (about $45K for an individual) who don’t have employer-based coverage–disproportionately young–will have new subsidies in the Exchange.
And here’s a key point: these subsidies in many cases will mitigate the increase that comes around because of age rating limits.
Even more so, the drafters of the ACA also created “bare-bones” policies available to young adults (something we’re not too fond of), in case they needed an even cheaper plan.
That’s how the different components of the Affordable Care Act work together–and why its silly to focus on just one provision without any consideration of how this interacts with the whole. As Ezra Klein of the Washington Post points out as well, there’s much else to the ACA. There’s the ability to stay on your parents’ coverage until age 26–something 350,000 Californians have taken advantage of. There’s the Medicaid expansion–young adults at or under the poverty level won’t lose their Medi-Cal coverage at age 18!
But beyond all these huge and obvious benefits of Obamacare for young people, there’s one more: the freedom of the young (and the young at heart) to pursue their dreams. The current insurance market where people are denied for pre-existing conditions means too many young people feel that they in order to get health coverage, they have to limit their job hunt to large employers who offer benefits.
The Affordable Care Act liberates the artists and the entrepreneurs to follow their life goals without the “job-lock” that the need for health benefits has created in the past. Here in California, it liberates both the aspiring actor in Hollywood and the engineer with a dot.com start-up idea. I believe that these changes in our health care system will enable the next generation to provide a renewed infusion of dynamism into our culture and economy. That’s the change that many voters believed in, and still can.