November 27, 2013
I can’t quite understand the persistence of the ageist nonsense about how the health care exchanges need young and healthy people to sign up for them to work. There is a real issue about adverse selection.
If the only people who sign up are unhealthy and therefore have high expenses, then insurers will have to raise their prices. This will make plans less attractive to all but the very sick, which will force further rises in prices, leading to a further narrowing of the market.
But the key issue is whether healthy people sign up in large numbers. It doesn’t matter where they are young or old, the exchanges need healthy people to effectively subsidize the care given to the less healthy.
In this respect a healthy 60-year-old is every bit as valuable as a healthy 25-year-old. In fact, the healthy 60-year-old is far more valuable to the system since their premiums will be three times as high as the premiums paid by the 25-year-old.
All of this should be pretty straightforward. The exchanges need healthy people to sign up to be viable, it doesn’t matter how old they are.
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