May 28, 2017
The “young invincibles” is a myth that got created in the debate over health care reform in 2009 and 2010. Lots of media-types and more than a few policy wonks who should have known better proclaimed the success of Obamacare depended on whether healthy young people signed up for insurance. The argument was that the premium paid by these healthy young people, since they have relatively low health care expenses, would be subsidizing the cost of caring for less healthy older people. If they didn’t sign up for insurance there would not be enough money to sustain the system.
The problem with this story is that it really has nothing to do with the people being young. What matters is that they are healthy. And, there are plenty of healthy older people as well. In fact, since older healthy people (ages 55 to 64) pay premiums that are three times as large as those paid by the young, it actually matters much more whether the healthy old sign up for insurance than the healthy young. (The Kaiser Family Foundation did a nice analysis of this issue a few years back showing that even extreme skewing of enrollment by age made relatively little difference to the finances of the system.)
A version of the young invincibles reappeared in a Post article today on the Congressional Budget Office’s (CBO) analysis of the new Republican health care proposal. The piece discusses a provision of the bill which would allow insurers to charge different rates for people depending on their health condition if they had allowed their coverage to lapse for more than two months:
“Using information about a patient’s history — a practice known as medical underwriting — is intended as punishment in the GOP bill. For some, though, medical underwriting could be an advantage. Younger, healthier people could pay cheaper premiums if their insurers know that they are in good shape overall than if they are simply paying the same rate that everyone else pays.”
Including “younger” in this paragraph makes no sense. Insurers are already allowed to charge different rates based on age and, in fact, the allowable gap will expand from the current three-to-one under the Affordable Care Act to five-to-one under the Republican plan. This larger ratio means that healthy older people will actually stand far more to gain by having their insurance based on their health history than healthy younger people.
Both groups have large numbers of people with near zero health expenses. The difference between the average cost for the age group and the cost incurred by these healthy people will be far larger for older people than for the young. So this age focus makes absolutely zero sense. The problem is that healthy people may not sign up. If anything, it is a bigger problem if older healthy people don’t join the pools than younger healthy people, since they would be paying higher premiums.
The article might have also misled readers with a claim that is repeated in the headline:
“What they [Republicans] got instead is a new sentence in the report that could be particularly alarming for GOP policymakers.
“Under the GOP plan, the report states, ‘about one-sixth of the population resides in areas in which the nongroup market would start to become unstable beginning in 2020.'”
This statement implies that Republican members of Congress are actually concerned about whether people are able to get health care insurance. While this is possible, but there is little evidence to support this view. Given the structure of the plan, it seems the main concern of Republicans is to give tax cuts to rich people.
Comments