Experts say that young, healthy people must enroll in ObamaCare’s health exchanges to cover the cost of insuring sicker, older people. It’s a simple math equation: Charge everyone roughly the same rate for access to basically the same product. The people who use it less will subsidize the people who use it more.
The problem with this plan is that it hoses young, relatively poor people like me right when we least need high bills for services they’re not using. And it helps older, relatively rich people who should be able to afford the care they need. If America’s downtrodden and struggling young people are smart, they’ll opt out. Then it’ll be up to the federal government to fine them enough to make up for the shortfall.
First, let’s look at the math. As Nick Gillespie and Veronique de Rugy have pointed out for Reason magazine, the concept of today’s older generation as impoverished is simply wrong. In fact, today’s seniors are far wealthier than today’s young adults.
Looking at rates of homeownership, 83% of elderly households own a home. Meanwhile, 36% of millennials are still living under their parents’ roof. Those over 65 years of age have much lower poverty rates than most other demographic groups. Households headed by people 65 or older have 22 times the wealth of households headed by people under 35.
Not only are many young people either unemployed or underemployed, the Consumer Financial Protection Bureau estimates that people under 40 owe 67% of the roughly $1.4 trillion that Americans owe on school loans. That’s on top of an average of several thousand dollars of credit card debt.
ObamaCare forces people who can scarcely afford the extra cost to subsidize care for people who absolutely can afford to pay for their own health services.
In the exchanges, a young person will have to pay an estimated $250 per month for basic insurance. Again, this cost is so high because these premiums are expected to pay for older people’s healthcare costs. These costs now include covering a plethora of expensive drugs, services and procedures thanks to ObamaCare’s requirements for insurance plans.
Another math lesson seems to be needed here: Insurance is only a good deal when it actually works like insurance. Using insurance to pay for routine care and predictable healthcare needs makes it no longer insurance, but cost pooling.
Using insurance to pay for routine healthcare services distorts price signals and increases costs through layers of administration. ObamaCare’s requirements that insurance pay for even more routine care than before codifies the fundamental flaw in the “insurance” (actually cost-pooling) “market” that we have today.
The only solution to achieving access to affordable catastrophic coverage for young people and affordable healthcare services for older people is an actual market in health insurance and in healthcare services. Young people need access to actual insurance, something that ObamaCare actually outlaws. And older people need an undistorted price system in healthcare.
Instead, ObamaCare exacerbates and mandates everything that’s wrong with our current system while attempting to transfer costs in the exact wrong direction, from old and rich to young and poor. This is both extremely inefficient and completely unfair. The only thing that would make this worse is if Congress attempted to raise the fines for opting out enough to actually cover the enormous shortfall young people opting out in droves will create. Let’s hope for the future of America they don’t.
This post was originally published at MOTHERFUCKING Forbes.