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Young Are Needed for Health Care Reform Success

Sean Evans, Chair and Associate Professor of Political Science
Nov 22, 2013

The rollout of Obamacare has been a disaster. Today, Republicans think Obamacare will guarantee them election victories while Democrats hope the worst is behind them and support for Obamacare will gradually increase.

 Which party is correct will depend on the answer to these questions over the next year.

 First, how long does it take to fix the website? Obamacare depends on increasing the size of the insurance pool that pays benefits. The longer it takes to fix the website, the more the impression of failure will lead people to avoid signing up.

 Second, who signs up? For their business model to work, insurance companies need 9 million new customers, including almost 3 million young, healthy people, to pay premiums to cover the costs of older, sicker patients. The most persistent enrollees will be very sick people, those with pre-existing conditions and older people who have higher costs. If young people do not sign up, Obamacare creates new high-risk sick pools that will costs more and lead to higher premiums next year.

 Third, how will people respond to higher premiums? One friend in Jackson saw his insurance rise from $320 per month to $953 with a $1,000 higher deductible and higher copay. To purchase a bronze plan, his insurance premium will rise to $506 per month with a $2,500 deductible and insurance paying 50 percent of costs up to $6,350. He will buy insurance to protect his family, but he is upset that he pays more for a worse plan. Will others who lose insurance do the same and buy a higher priced plan, or pay the penalty of $95 or 1 percent of income?

 Democrats hope subsidies will reduce costs and lead people to buy insurance, but the subsidies don’t help enroll uninsured, healthy young people who are needed to pay premiums, but not use the health plan, to subsidize costs of the sick. A 27-year-old single in West Tennessee earning $25,000 will have to choose between paying $1,730 for a bronze plan or a $250 fine. Two married 27-year-olds who make $40,000 will have to choose between a $3,312 annual premium or $400 fine. Will people with limited disposable income be able and willing to pay these premiums?

 Fourth, how will people respond to sticker shock at the doctor’s office? Most people have difficulty understanding health insurance. How will they respond when they go to the doctor and have to pay the first $4,000-$5,000 before insurance starts paying most or all of the costs?

 Finally, what happens next October when premiums for 2015 come out? Will premiums remain roughly the same because enough people bought insurance? Will insurance companies raise premiums to cover extra costs because not enough people bought insurance? Or will insurance cut payments to providers to keep premiums down so people buy insurance? This option may lead more doctors to refuse to take patients with certain insurance or force health facilities to close.

 For answers to these questions, listen to Democrats. If Democrats are praising Obamacare, then Obamacare is working. If Democrats are promising to change Obamacare, problems remain, and they are trying to avoid the political repercussions of supporting Obamacare.

This column originally appeared in the November 22nd edition of The Jackson Sun