Browsing the blog archivesfor the day Monday, February 11th, 2013.

Clue: We All Get Old Someday

Health Care, Obama Administration

Ben Smith warns that President Obama is about to “screw his base.”

The passionate supporters are the youth, who voted for him by a margin of 60% to 36%, according to exit poll samples of people 29 and under. His enemies are the elderly: Mitt Romney won 56% of the votes from people 65 and over. And while one of ObamaCare’s earliest provisions was a boon to the young, allowing them to stay on their parents’ insurance through the age of 26, what follows may come as an unpleasant surprise to many of the president’s supporters. The provisions required to make any sort of health insurance plan work — not just ObamaCare, but really any plan of its sort — require healthy young people to pay more in health insurance than they consume in services, while the elderly (saved by Sarah “Death Panels” Palin from any serious attempt to ration expensive and often futile end-of-life care) consume far more than they pay in. There is always a push and pull, however, and this year will be spent laying plans to shift the burden further toward the young.

Before I go on to the main point, I want to say that I find the use of the word “enemies” a bit jarring. I don’t think a rational politician thinks of voters who vote against him as his “enemies,” but rather as a pool of people he wasn’t able to reach. Ben Smith also seems to be implying that the President should heap bennies on the young for voting for him and kick the old to the curb, rather than just do the right thing for everybody.

A larger point is that conservatives persist in supporting the idea of paying for health care through the private insurance industry, yet they also persist in being ignorant of how insurance risk pools work. If everybody only paid in what they received back in services, it wouldn’t be insurance any more, would it?

The main point is that we all get to take our turns being young people, then middle aged people, and then old people. Unless we die young, of course. Assuming an average life span, today’s hunky young dude is tomorrow’s shriveled old geezer. As individuals, we move around in the risk pool — sometimes we’re in the shallow end, sometimes we’re in the deep end — which is why risk pooling is preferred to just making people pay for stuff. In the course of a lifetime, we all take turns being givers and recipients. This is how insurance works.

Rick Ungar at Forbes explains the situation:

According to AHIP, the average premium paid by a 24 year old in the individual marketplace is $1200 a year. Using AHIP’s numbers, the price of making the cost of heath insurance more equitable for a 60 year old will potentially cost that 24 year old, on average, an extra $45 a month.

While I don’t mean to minimize this increase, as I recognize that every dollar counts when one is young and getting started, it is important to keep the actual price tag in perspective and weigh the equities when considering that those at the older age range have been overcharged for many years.

The reality is that the young have been paying unreasonably low premium rates for for a very long time—it being in the health insurance company’s profit interest to bring in as many young and healthy people as possible in the door by charging artificially low rates. The problem is that they make up for it by charging artificially high rates to the older people the insurance company would rather not have in the first place. What the ACA seeks to do is correct this situation so that 60 year olds are not precluded from gaining health insurance coverage by being priced out of the market.

I did some checking and found out that in some states, insurance companies are allowed to charge their older policy holders ten times more than the younger policyholders. When Obamacare fully kicks in next year, insurance companies will be allowed to charge their oldest policy holders no more than three times more than they charge the youngest ones.

Naturally, the Right frames the change as screwing the young. What’s sad is that so many older people have been bamboozled into thinking that the Right is on their side, when it plainly isn’t.

Next year, insurance companies must also stop charging women higher premiums than men just because they are women, as they do now. By the Right’s logic, Obamacare is unfair to men.

And, of course, it occasionally happens that a young person gets cancer or gets hit by a bus. By the Right’s logic, older people facing multiple health problems must kick in higher premiums to pay for that person’s care, but not the other way around.

It’s also the case than when an uninsured 50-year-0ld runs up a staggering medical bill before he dies, his 20-something children will be stuck with the bill. Paying $45 a month more to help Pops keep his insurance policy is a bargain in comparison.

If we want to help young people, how about doing something toward lowering the cost of higher education and student loan debt? And if you want to make health care as equitably low-cost as possible, how about single payer?

Update: Zandar comments,

Holy crap, Ben Smith has discovered ACTUARIAL SCIENCE. Healthy people paying for premiums and not consuming health care pays for sick people who are consuming health care. ALERT THE INTERNETS.

Update: Sarah Kliff explains why young people probably won’t be hurt by a spike in insurance premium cost.

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